Exploring Innovation at CPS with Jayson Smith: A Deep Dive into Utility and C&I Energy Solutions

The transcription of the video is below.

Introduction and Background

Kerim: All right. Hi everyone, this is Kerim, Kerim Baran with SolarAcademy. Today, I am here with Jayson Smith from CPS. As you might have seen in a previous conversation, we talked quite a bit about CPS and their strong position in the U.S. market when it comes to inverters and related solar equipment. But today we’re going to talk a little bit more deeply in CPS’s utility and ESS product solutions.

However, before getting in there, Jayson, I’d like to talk a little bit about your background, how you found yourself in the solar and renewable energy space and specifically at CPS. Feel free to go back in your personal history of how your academic and professional career started and evolved, and here we are.

Jayson Smith’s Journey to CPS and Role at the Company

Jayson: Definitely, definitely. Hello, everyone, and thank you, Kerim, for inviting me to sit here and have a conversation with you. A little bit about myself so I got my degree in mechanical engineering from Texas Tech University. It’s actually kind of funny because all I work in now is electrical engineering. I don’t know why I went with mechanical.

Kerim: And you’re a guy from Houston, the home of the oil industry.

Jayson: I know, right? Why am I in renewables? It’s crazy. Right whenever I graduated, I went to work for a company by the name of Innovative IDM, and that’s where I kind of cut my teeth, if you will, in the electrical industry. In that company, we had a large focus in industrial electronics.

On a daily basis, I would be going into these manufacturing facilities and looking at AC motors, DC motors, variable frequency drives, maybe their HMIs or their PLCs, which are programmable logic controllers. I got a really good basis of understanding electrical systems then, and really, really enjoyed working for them. We even manufactured some full electrical cabinets and whatnot, really got a good idea of looking at single line diagrams and things like that.

Then from there, I actually transitioned over into renewables with Q-cells. What ended up happening there is I had a good friend that I had worked with at Innovative IDM, and he was like, “Hey, you know what? Let’s be slightly better people and work for a renewables company.” I was like, “All right, well, let’s do it.”

And I started working for Q-cells. There I was a field applications engineer.

Kerim: And you were in the module business of Q-cells, I assume?

Jayson: Not on the module side. It’s actually interesting. Q-cells has a battery division as well.

And if you look at the topology of an inverter for a battery, or even for a PV inverter, the topology is just like the topology that you find in a variable frequency drive. Now, there are a few different things here and there, one uses MOSFETs, while the other uses what we call IGBTs, but that’s kind of getting into the nitty-gritty.

Overall, the bridge structure is fairly similar. Whenever I started working for Q-cells, I had a pretty good idea of what I was getting myself into. But as a field application engineer for them, my main thing was usually going out and fixing these sites that for some reason were having issues, or providing technical trainings for people who would be working on those sites, and so on and so forth.

I got a really good look at the solar industry as a whole, working with them. Now, with them, I worked mainly on what we would call split-phase or residential type of systems. After working with them for a while, I realized, “Well, I kind of learned a lot, and I think I’d like to go into something that’s a little bit higher power.”

That’s actually where CPS came along. I’ve been with CPS now for, I want to say, nine months or so, just shy of a year. With CPS, I now focus heavily on the C&I and utility scale ESS systems that they have.

Now, we actually also have a split-phase system as well, or residential, whatever you’d like to call it. But I try to shy away from working on that one. I like the big stuff.

CPS: Company Overview and Evolution

Kerim: With that, maybe I should share my screen, the PowerPoint you shared with me, to talk a little bit about CPS and its history.

I remember having run a solar equipment distribution company in the early 2010s. About a dozen years ago, Kyle Cherrick and team was introducing CPS to the market back then. I don’t know if you know Kyle, who’s doing a bunch of stuff.

Jayson: Do you know Casey?

Kerim: I remember the name Casey, but I can’t put a face to the name.

Jayson: Yeah, he was one of those OGs as well. So really, really good guys, really good guys.

Kerim: And I do remember CPS being really strong in the C&I space, but now I think, I’m recently learning about its massive footprint all over the world and Asia and the massive products. Let’s talk a little bit about that. We’ll talk about the battery and the energy storage systems, but let’s talk for a few minutes about CPS in the world.

Jayson: Definitely, yeah. To give you an outline of what it looks like, Chint is our parent company. They own CPS America, right? Chint has been around since, I want to say, 1984.

The entire time they’ve been around, it’s been focused on electrical equipment and heavily in renewables. This diagram that you’re showing right here really is a pretty good representation of just how massive the company is. They’re everywhere, literally everywhere.

I mean, half of the people listening to this could probably go to the loads panel in their home and open it up and find a breaker that Chint makes. A couple of cool things –

Kerim: According to Bloomberg NEF, Chint or CPS is the number one bankable inverter brand in the world, I guess, as of –

Key CPS Product Differentiators

Jayson: Yep, that is accurate. Actually, CPS America has been the number one PV string inverter for the last handful of years, seven or eight, something like that, been the number one.

So a rich history in PV inverters and specifically the string design of PV inverters. We don’t do central. We’ve actually taken that success and we’ve moved it over into our battery system, which we’ll touch on here shortly.

Right here is essentially what we have for our battery offering. That top bit is going to be our 5 megawatt hour best container.

So that’s going to be a 20-foot HC standard container.

And then that 2.4 megawatt string skid is also 20-foot size. And that’s going to be what’s actually doing the DC to AC, AC to DC. That actually comes with a transformer on it, which is super interesting and something we can talk about a little bit later when we get to the dynamics of the market and some of the pain points that people are seeing right now.

We’re actually able to get around a couple of those pain points because we will incorporate all of the balance of systems into that skid for you. So that skid is comprised of those 200 kilowatt PCSs. So to explain this a little bit further –

Kerim: Should I go to the next slide now?

Jayson: Go back real quick, right there. I was just going to explain that we can dig in and talk about how that actually connects to the battery later and how that gives you that string design.

On the bottom is our C&I, so our smaller scale, which you can see we have the 125 output and the 250 output. Those are also very interesting. When you get to the 250, you actually get into a bit of a string design there as well.

As I said, we’re taking all that knowledge that we got from the PV string inverters and we brought it over into our battery system with the goal being easy installation, quick commissioning, and less downtime in the long run. Actually, I did a white paper the other day that was like a central BESS inverter versus our string design. And if you run it out for a 20-year lifespan you see that if there’s one or two instances of failure, really you just need one instance of failure from that central inverter to make it not worth your money versus a string design system.

A lot of people are like, “Oh, well, PCSs are going to be more expensive.” They’re really not, but if something were to happen, you’re only losing one little bit of your output. You’re not losing your entire BESS container. It’s super interesting. 

Kerim: Let’s dig into that. And essentially, these product lines on the utility side, the 5 megawatt-hour LFP container and the 2.4 megawatt-hour SCID and the C&I products are essentially your day-to-day responsibility areas as a solutions engineer. You talk about these solutions and their key benefits all the time, I assume. Let’s dig into those key benefits. I guess this slide is where we can start digging in a little bit more, huh?

Jayson: Yeah, so I put this slide in here to give a reference point of what a normal installation might look like. Obviously, we have our PV inverters, breaker box fuses, all that stuff, even medium voltage transformers. That’s all going to be on the PV side.

But the main thing I want to point out here is that point of interconnection, which I alluded to this a few minutes ago when I was talking about some of those pain points that people are seeing. Those pain points I was talking about was the transformers. With our PCS SCID, you get a built-in transformer.

That transformer can be 12 kV to 34.5, right? Whatever you essentially need it to be, we can make it. We can get you that in six months when most people are finding that transformers right now, you can’t get for nine months or a year. That alone is a huge benefit that we’re seeing.

It’s actually been really nice for us and our customers. But with that ability, we can pretty much interconnect wherever you want us to, right, since we have that wider range of outputs. That’s really what I wanted to showcase right here.

And then also, you see that there are two battery containers going to one PCS SCID. That’s what we would call our four-hour model so 10 megawatt hours of capacity and 2.4 megawatt max output.

That actually can be increased a little bit, but for all intents and purposes, 2.4 megawatts of output right there. Obviously, we can derate that as well if we needed to, but this is a standard-looking design that we would see on some of these larger scale systems.

This is similar to what we just saw for the utility, but this one’s going to be focused on the C&I.

You can see this one’s behind the meter. The C&I system has actually been fantastic for us. We actually had an older, smaller battery system that we sold for a little while, but we’ve moved on to the 125-250 now.

And then we obviously have some stuff coming out in the future, which I won’t touch on today, but just some nuggets for you guys. What you’re seeing here, though, is going to be a standard setup. Obviously, with CPS, we can provide a large majority of this.

In fact, the only thing that we can’t provide, I would say, is the diesel generator or your loads. On the solar side, obviously, we have our PV inverters, and we actually have a sister company, Astro Energy, which makes PV panels. They’re also owned by Chint. You can get that all from CPS or our sister company.

And then the energy storage system, obviously, like we’re talking about today, is going to be from CPS. One cool thing, though, that we’ve done on our C&I system specifically is we have a partner called Elexity that we work with for our EMS system. Now, I want to make it very clear that for the energy management system, we are agnostic.

We have a local controller in the backside of our PCS cabinet that you can hook up any energy management system that you want to, and basically gather that data, control the system, whatever you need to do. However, we’ve realized that in the market right now, a lot of people want a one-stop shop, right? We provided that through our partner, Elexity.

And we can talk about some of Elexity’s stuff later. It’s a very interesting company. They have some great different things that they can do with their system as far as controlling load dynamically and whatnot.

It’s just super, super cool stuff, but as I was saying, in this scenario right here, from CPS, you can get our PV inverters. You can get our energy storage system.

From our sister company, you can get the PV panels. Go somewhere else for the diesel generator. That’s about it.

But we can even do… so this is showing what we would call a grid-tied system, right? In this scenario, standard 125. Most of the time, this scenario would be used for basically peak shaving or shifting of your high demand. You actually see this a lot in California now. We have a couple of sites and scenarios where people have a large building and they’ve had a decent amount of solar panels put on it, say, in the past, right? Now with NEM 3, all these new projects, even some of those that were just finished up, they’re not getting anything when they’re selling back to the grid.

Kerim: Well, I mean, hopefully they got alive back in NEM 1 or NEM 2 days.

Jayson: That’s what you’re hoping for. But if you didn’t –

Kerim: If you missed that window and you have to finish it in NEM 3 rules, you’re a little bit out of luck. So you definitely need to integrate batteries now to make best use of your electrons.

Jayson: It’s crazy because I didn’t put a slide in here, I should have, that shows a graph of an estimated graph of what your energy buyback price would be under NEM 3.

Kerim: It’s a small fraction of what you were getting before.

Jayson: It’s atrocious. I mean, there are times when you’re getting a 10th of a cent and it’s like, “Okay, well, it’s not costing me money.”

Kerim: But you can’t blame the utility companies for that because they have so much supply of energy in the middle of the day when solar is cranking. And so it’s like those COVID days when we didn’t have any place to put the oil coming in with tankers. It’s kind of the same dynamic.

Understanding the Technology: EMS, BMS, and PCS

Jayson: You’re exactly right.

Kerim: So going back to the slide, you’re talking about the EMS, the PCS, and the BMS. I vaguely know what these terms mean, but for some of our viewers, can we do a little bit of education of what they all stand for and how they all work with each other and where they are? I know the EMS sits here, but where in this picture does the… so EMS stands for…

Jayson: Energy management system.

Kerim: And then there’s the battery management system, BMS, and then there’s PCS, which is the power conversion system.

Jayson: Correct.

Kerim: And I assume the BMS sits right on top of the battery.

Jayson: Yeah, it’s in that battery container. So it’s sending…

Kerim: The PCS goes where in this picture?

Jayson: The little one just to – no, go back down to energy storage system.

Kerim: Oh, right here?

Jayson: There. Inside that cabinet is where your PCS lives.

Kerim: And that is where your AC/DC conversion is happening?

Jayson: Correct. That is correct. How it really looks is the BMS is controlling your battery. 

Kerim: How is that AC/DC conversion different than the traditional string inverter for a solar system?

Jayson: It’s actually in the name. Inverter technically refers to one direction. 

Kerim: DC to AC, so it converts the DC coming from the panels into AC that is in sync with the grid.

Jayson: Now we call a PCS a power conversion system. We call it a PCS because it can go both ways. We can go DC to AC, AC to DC, and charge to that in simplest terms.

Kerim: Got it. All right. Thank you for that clarification. What are some other unique differentiators for CPS in the market today as we look at this system and also the utility system that we were talking about before this utility solutions? And I don’t know if I should go back to those slides or kill the slides and just talk face-to-face about that now. 

When you’re making your sales pitch, sales conversations or post-sale support, what are the times you say, “Oh, thank God, we do the things this way because it creates a lot of value for the customers.

Jayson: Got you. There’s a couple of things. I’d say, number one, hands down by far, the biggest thing for CPS other than our own brand is going to be our service. Chint has been known throughout the years to have Tier 1 service on everything.

We’ve taken that from our PV inverters and brought it directly over to our BESS as well. Whenever somebody messages us and says – even from the beginning cradle stages of a project, they message us and they’re like, “Hey, I need help on XYZ.” It immediately is going to come to an engineer, me or one of my coworkers.

And we’re going to start working with them, helping provide information. The only thing that we won’t do for you is I’m not going to sign an SLD for you. I’m not a PE, right? Other than that, I’m going to help you through every single step of the project. And then once that project is on site, I can be there to help you commission it. And then once it’s commissioned and running, through our FlexOM, we can sit there and help you monitor it. And then throughout the lifespan, if anything happens, you can call us.

We even offer long-term service agreements that we can do to help you out and help the customer out. So I’d say one of our biggest things is that from cradle to grave, we are there and we are a contact. And every time you call, you’re going to get somebody, who 9 times out of 10, has some type of engineering degree or even a master’s or a doctor’s degree.

Kerim: You’re almost like a service company as much as a product company. Do you charge for the service as well as a separate line item or is that integrated into the product?

Jayson: Obviously, all of our stuff comes with a standard warranty, right? You can increase that warranty and then you can also add a long-term service agreement on there. 

In addition to that though, we’re pretty nice people, okay? If you’re having an issue and you need some help, you can definitely call us at our hotline and then we’ll provide some information or let you know where you need to go to figure something out. We’re pretty open with helping individuals, but we do provide that long-term service agreement at a charge.

Kerim: Got it. Got it. Great. What other key differentiators for CPS can we bring up in this conversation? I remember in our previous conversation, you mentioning the string design being a key benefit with the multiple cabinets. Can you tell us a little bit about that in the context of utility scale solutions and C&I?

Jayson: That’s what I would call the other big differentiator. Like I mentioned before, with the string design, you get redundancy.

Essentially how that looks for the utility scale is inside that battery container, you have different racks of batteries, right? Each rack is controlled by its own individual PCS.

Utility Scale Solutions

Jayson: If you’re looking at the bottom right, you see there’s the couple of little green lines going. What that’s trying to denote is that you can see the individual racks in the BESS container, right? Each one of those racks goes to its own PCS. If something were to happen for some reason, and one of those PCSs has some type of issue, you’re not losing your entire 5 megawatt hours. All you’re losing is that one 200 kW output. That’s massive, right? That’s huge. Especially when you get a lot of these things together.

The other big thing, though…

Kerim: That’s like the micro inverter effect in a residential installation.

Jayson: That’s exactly it. Well, and just like how micro inverters are really easy to go and swap out, we’ve made these really easy to go and swap out.

Literally all you have to do, all you have to do is if one goes out, you would go up to it. You would obviously turn off the disconnects for that PCS. You unplug. I want to say it’s three cables on the back, two cables on the front, plus a comms cable. Slide the whole thing out, slide a new one in. You can do it in, I don’t know, 30 minutes, an hour.

Kerim: These are the components we’re talking about.

Jayson: We’re seeing the racks there. There are eight modules per rack. And then this actually shows a little bit more as well, as far as our viewing structure. One thing that’s really nice about how we have this set up is we want to get as granular as we can, right? We want to see everything.

Inside each module, we have CSC sensors. Essentially what that means is we can see individual cell, temperature levels, voltage levels, everything like that. That data is then taken and it’s brought down to – that would be the BMU.

And then that’s brought down to what we call our BCMU. All these acronyms, don’t worry about them. Essentially what I’m trying to tell you is that from our module level view, we can take all that data and put it and say, “Okay, this rack with these eight modules in it is doing this as a whole, right? Then that goes over to our actual battery management system, which is talking with our PCS and the EMS.

Essentially we can control everything at a much finer level, and we can see if there are any issues going on. We can correct any differences in the state of charge between cells and modules. That ability not only helps us make sure everything’s up and running, right? But we also have the ability to increase the lifetime of the battery system because we have that granularity and that ability to control an individual rack.

With like a central, you just push in power to this block, right? Now we’ve essentially cut up this block and push power to this one, this level and make sure everything’s even all the way throughout. Big…

Kerim: And that probably ends up mitigating the total downtime of a battery system in its lifetime.

Jayson: Definitely.

Kerim: Because worst case you’re sometimes, you’re not down for a day or two days or hours, but you’re just down 2% of the whole battery system for a day.

Jayson: That’s it.

Kerim: That ends up being like, you know, still 99.5%.

Jayson: Exactly. And that’s where the big cost savings come in. A lot of people for some of these large utility scale installs that we do, they’ll buy a couple of extra PCS units just to keep on site so they can swap it out immediately, send us the old one and and for under warranty, we’ll fix it for free. Right? Send it back to you.

Kerim: That makes sense. How about in the C&I segment? Does this same logic transfer over there and what are some other elements that come into play?

Jayson: It does when you get to a 250 system.

Kerim: Should I pull up the slide again?

Jayson: You can. Pull up that number 3 slide. Or this one it actually works well. That one right there is fine.

Kerim: Okay.

Jayson: Let’s look at this one. Okay, just to put it out simply, what we’re looking at here is going to be the front side of the PCS cabinet. In the PCS cabinet, you see denoted right there, there’s 225 KW PCSs.

Each one of those will control its own battery cabinet. For the 125, when there’s only one of those 125 PCSs in there, and then you only have one cabinet, so you don’t really get the benefits of the string design. It’s just because it’s so small, right? But when you move up to that next step to the 250, now each 125 is controlling its own battery cabinet.

If one of those goes down, you still have the other battery cabinet. You see, we still have that implemented. It’s hard to implement it on a really small system, but we still do it once you get to that 250.

Commercial and Industrial (C&I) Solutions

Kerim: I assume you can design solutions at multiples of 125 KW for a C&I like you can do a 500 KW system probably, as well as a megawatt or 375. I don’t know if that’s possible.

Jayson: And that gets into, like you can parallel, right? We would have, say like this setup right here is the 250 setup. You’d have this PCS and then a battery cabinet on one side, battery cabinet on the other side, or however you want to configure it.

We could add the exact same thing next to it, parallel it all together and run that all to a single EMS that’s doing the high level control of everything. We can do that up to eight. We can have eight of them together whenever we’re grid-tied.

Now there are some nuances there. I will say whenever you get into the microgrid that goes down. You can only put four in parallel, but that gets into loop currents and more technical type stuff that I don’t think we necessarily have time for today. But to answer your question, you can put quite a few of these together and have it run that way, depending on how much capacity you need.

Kerim: There was also the point about isolation transformers coming into play in these designs. Can you tell us a little bit about that too? And then the 480 volts playing into it also?

Jayson: Which I’ll keep it all high level. But essentially what I was talking about with that when we spoke previously is whenever you are doing an install where you want to be able to have a microgrid, where you’re independent from the grid itself, you’re going to need an isolation transformer. And the reason for that, so our system and pretty much every other C&I system out there outputs a 480 delta. Essentially the output looks like a triangle, right, if you were to draw it out.

With that, there’s no neutral point. You need what we call an isolation transformer, which in most scenarios would be a delta to Wye. That way, so the primary side would be delta, the secondary side where your loads are would be a Wye. And you do that, that way you can create a neutral for your loads. So that is a requirement. It’s designed in a microgrid.

Kerim: That is why it’s three-phase. Is that the difference between three-phase and single-phase systems in Resi versus C&I?

Jayson: No, so Resi is a different beast. Resi is a split-phase. You can actually look at it as a Resi output would be like line one and line two essentially, and then C&I would be line one, line two, line three. So it’s different. It’s definitely different.

Kerim: We don’t need to explain it all now.

Jayson: Technically speaking, if you look at a transformer, all it is, is three single-phase transformers put together to a common iron core.

But we can get really deep into it if you want. I don’t know how much time we have, but split-phase is going to be…

Kerim: Maybe we’ll do that in a separate conversation.

Jayson: Let’s do that.

Kerim: Going back to the topic in hand of, why an isolation transformer is needed in the more C&I applications.

Jayson: And the short answer to that question is we’re creating a neutral. We’re creating a neutral point.

Kerim: And so when you look at the market today, where do you see most demand and what kind of applications and geographies and types of customers are demanding your utility and C&I type solutions?

Jayson: There’s a ton of different scenarios that we see. I’ll start with saying that. But some of the really common ones, it’s actually interesting because geographically speaking, things change. But like, we’ll take California because we were talking about California earlier.

With California, because of NEM3, we’re seeing a lot of people put in batteries there to capture that excess PV. And then, essentially the graph would look like, okay, high PV in the middle of the day. They’re creating enough power that they’re getting rid of their loads and they have excess.

Impact of NEM 3.0 and Market Adaptation

We throw a battery system in there so that way we can charge during that peak PV production. And then we’ll discharge that battery when that demand is still high between say 6:00 p.m. to 9:00 p.m. or somewhere in that range, further reducing their demand charges. Right? Because that’s really what’s killing people. I mean, you have some of these businesses where 75% of their electric bill is because of some 15-minute demand peak. It’s crazy.

Having that battery there –

Kerim: Like a church. Sunday morning is crazy there and they do get those demand actually. Then in the rest of the week, it’s just quiet, dead in there.

Jayson: The rest of the week is nothing.

Kerim: It’s a unique use case, you know?

Jayson: That’s exactly right. We had to install an installation the other day out in California, by the Chino area. It was actually a school. And we did our system with the Elexity EMS. They had some solar and whatnot on the roof. Through our financial models, which we work with Elexity, engineering tool base, how they’ll do a financial model.

Well, we can actually do the same thing with Elexity. Well, I should say Elexity can do the financial model knowing our system and everything. We did this financial model.

Kerim: You’re referring to the modeling of the return, like the energy tool base solution.

Jayson: Precisely. That is exactly right.

Kerim: This is all to offset that duck curve we were referring to, and talking about the duck curve, I just wanted to share this from the solar chart section of SolarAcademy. This is California’s duck curve and how it evolved from 2015 to 2023.

Like this is the effect of solar, essentially.

Jayson: But you’re still seeing that 6 to 9, 10 PM.

Kerim: Yeah, of course. That’s crazy.

Jayson: And that part will still get you. So what we’ve done…

Kerim: And are you seeing this in a residential setting or in a commercial business setting?

Jayson: Commercial, whether it be an office, a hospital, a school, a manufacturing facility, anything like that, you’re seeing –

Kerim: They have two shifts and they go till 9 or 10 and that evening hour is still crazy there.

Jayson: Exactly. And what I was getting at through our calculation, the payback for our system plus the Elexity EMS is like three and a half to four years.

That’s a super-fast payback for a system that’s going to last 20 plus years, you know? I mean, at the end of the day, it’s like, “All right. Well, I’m saving a lot of money by implementing this, which is fantastic. And Elexity, actually, they’re amazing. I said earlier that I’d speak a little bit on this.

They have the ability to actually control your HVAC unit as well. HVAC units, they account, especially in Texas and Southern California, they account for 80% of your overall demand charges. Because whenever those things take on, it’s power. They have the ability to take that and essentially make a thermal battery out of your office.

So, you can set a window to say, “Okay, this is my comfort zone.” Whenever it’s the middle of the day and your solar is going…

Kerim: You just make it cold.

Jayson: You make it cold and then once that 6:00 p.m. hits, then you slowly go from that cold, slowly up, right? Instead of it just kicking on immediately and you get in that high charge, that coupled with our battery, I mean, you’re sitting pretty. It’s really interesting to do the calculations to see just how much you can save.

Kerim: Right.

Jayson: The EMS itself is fantastic.

Kerim: It’s incredible. I was talking to a colleague in another conversation how the city of Cambridge, Massachusetts used to run on DC electricity 100 years ago. And also about 100 or 80, 60 years ago, companies had a VP of electricity type or VP of energy for the company to optimize their energy. And I feel like we’re moving back towards those trends.

Microgrid Solutions and Isolation Transformers

A lot of DC production happening behind the meter, behind the transformer on the side of the consumption, and also, a lot of optimization opportunities are going to come with that. We’re going to have like mini managers or maybe VP managers of energy and large companies, like the big tech companies obviously have huge departments that deal with in that.

But I think that might become a more common thing even for medium-sized commercial and industrial assets.

Jayson: I completely agree with you. I completely agree. You can save so much money by putting a little bit forward essentially is what we’ve noticed, and you also have those scenarios though where like the grid, we all know that the grid isn’t what it used to be is a good way to put it. It’s not able to provide the power that everybody necessarily needs.

We’re even seeing that from these electric providers where they’re starting to install some of these large PV array fields with batteries, so that way, there are old transformers that they have which have been getting overloaded for these towns. They’re not having to put the stress on them that they used to because you can interconnect on the secondary side, right? Going straight to –

Kerim: Oh.

Jayson: Yeah.

Kerim: Through Bypassing the old transformer you mean?

Jayson: Essentially, you’re injecting power to take the load away from that transformer.

Kerim: You’re still going through that transformer when you inject the power.

Jayson: Well, okay. What I’m talking about is from their power plant, right, you have your transformer that say, you have one that’s shooting out 34.5, right? Well, we can come in and we can plop our battery system and our PCS unit down there. We can connect to that 34.5. Then that transformer that’s at the power plant isn’t having to take all that load because we can inject. Do you see what I’m saying? That’s another thing that’s been happening.

It’s so expensive to put in new equipment everywhere, and running highline wires is not cheap.

Kerim: Right.

Jayson: That’s another scenario that we’re seeing a lot of, which those ones are fun.

I mean, they’re bigger scale.

Kerim: I guess we’re in agreement that a lot of production growth I think is going to happen on the other side of the transformer and the meter as we move into this century.

And so, what other applications, what other settings are you seeing this demand in? Besides factories, C&I in California is a whole other story, obviously. Are you seeing in other geographies? You mentioned some of the flyover states being overloaded.

Jayson: In the Midwest, like you said, you’ve actually seeing a large influx of people moving there. And even, I don’t know if you consider Texas a flyover state, but even Texas, maybe parts of Texas, I can tell you Lubbock, you can just fly right over that place.

Kerim: This is the number one solar state now, I think, or number two.

Jayson: It is. If you group Texas into that, like I was saying before, you’ve gotten to where all these people have moved to these new places and the amount of people requiring power there has increased so much that the existing systems just can’t handle everything. That’s where we’re coming in and we’re supporting these utilities by installing these massive PV farms with battery systems to capture some of that excess PV whenever maybe the demand’s not quite as high, but it’s still pushing power, and then that unit can discharge at some of those peak times later in the afternoon.

Future Outlook: Growth and New Applications

That’s a big thing that’s going on, like I said, through the Midwest, definitely in Texas. Texas has been just booming with install. I mean, it’s crazy.

In addition to that, there are a lot of manufacturing plants that are getting into the same idea because there’s a couple of areas where…

Kerim: This is outside of California you’re talking about, right?

Jayson: Outside of California. Okay. So, for instance, in Texas, let’s look at a really small scale. In Texas, on the residential side, you can get a pretty good cent per kilowatt hour when you’re pushing power back to the grid.

Because of that…

Kerim: Is that more similar to the early NEM 1.0 rules of California where you would essentially get credited back at your highest consumption rate no matter what time you produced? As long as you fed it back into the grid, they would start deducting. Or they would start crediting you for everything you exported at the highest consumption rate that was reflected on your bill. And I did that 10 years ago on my first solar installation on my previous home. I got a three-and-a-half-year payback on a really nice solar system. That was just an amazing deal.

Jayson: That’s it. Texas is similar.

Kerim: So is it in that stage right now? Because…

Jayson: I wouldn’t say it’s that good.

Kerim: I would say that makes sense until the grid is 5% penetrated, and I think that was when California transitioned to NEM 2.0. Once they went past 12% or 10% of homes having solar, then they had to go to NEM 3 for a good reason. You can’t blame them because it just… We saw duck curve. They don’t need energy in the middle of the day anymore and it becomes a problem, actually.

Jayson: And right now, this past year in Texas, there’s a couple of different companies that you can basically get on with.

Chariot Energy is one of them, where you can sell back that power. Now, it’s not necessarily one-to-one, but it’s like you’re going to laugh at these numbers because the cent per kilowatt is so low so you buy it at 13, I can sell it back at 8. That’s not bad, though.

Kerim: With Texas sun and also with Texas installation prices, which are way lower than California, and don’t ask me why. I’ll go on for half an hour on that. And I think the only reason is because consumers are not educated enough and the margins get wasted in the value chain.

Not wasted, but it just gets nicely dispersed between all the middlemen. And then that’s why we see $2.25 per watt prices in Florida and Texas and $4 prices per watt in California, still to this day, when the whole system costs less than a buck.

Jayson: That’s exactly right. I guess what I’m getting at is there are still areas where you can have a quick payback by pushing power to the grid.

And those areas, like you said, they’re not going to stay there forever. It’s just not how it’s going to pan out, in my opinion. That’s when batteries are going to even more heavy.

But there are also incentives for people that just don’t want to have a loss of power. Right? And we see that as well. But there’s still money to be made, for sure.

There’s also those… I don’t want to call them one-offs because there’s a lot of them, but more one-offs that are like the data centers. Right? There have been times where utilities basically tell them, “Hey, it’s going to be two years before I’ll let you interconnect.” And they’re a data center.

They’re trying to mine for Bitcoin or whatever. I need to be working right now. I’m making my money.

For those types of scenarios, they’ll have massive PV fields put in and then a crap ton of batteries put in. That way they can continue.

Kerim: And this is already happening right now, is what you’re saying.

Jayson: Oh, yeah. Already happening, been happening. Those ones are interesting though.

Kerim: Are they powering those data centers purely on solar plus battery and almost off-grid in an off-grid manner?

Jayson: Completely off-grid. Completely off-grid, waiting for interconnection to happen.

Kerim: But they’re still mining in the meantime.

Jayson: Oh, yeah. Think about it. You start mining.

Kerim: I did the math on a simple residential system, like $2 per watt, which I think is very reasonable, even though it doesn’t happen in most scenarios, 90% of scenarios don’t hit $2 a watt PV array pricing. I assumed a $400 per kilowatt hour battery and only assumed 85% usage, 15% going to zero, like zero export fee or loss or whatever.

You amortize that over 20 years, you’re still getting $0.06, $0.07 electricity with no cost of financing. Okay. Add a 5%, 6% cost of financing, double it.

You’re still at $0.13 electricity, which is lower than the American average for residential we’re talking about. Obviously, if you’re doing this at utility scale, the battery price is going to be lower. The PV array system price is going to be about half.

So all these numbers divided by half, you can make them work. There’s no doubt.

Jayson: Exactly. That’s the thing. I think that there are still incentives out there for people to install these.

I think everybody’s a little bit worried with the tariffs and stuff coming in, but to be honest with you, I don’t think that they’re going to do that much. I really don’t.

And the more worrisome thing would be if subsidies are taken away, but I don’t think that that can happen either because you look at oil.

Kerim: The ITC? I mean, I don’t think the ITC is going to go away.

Jayson: I don’t either. I mean, you look at it. I mean, oil has been subsidized for how long? It’s just not going to happen. I think that some people are saying they’re a little worried and whatnot right now.

Which is actually not bad because for the short-term, it’ll bring an influx in orders because people are like, “Oh, I want to get things in before some tariffs hit and whatnot.” But for us, I mean, it’s really not going to do that much. You know what I mean?

Kerim: Going back to the application use cases, if I can pick your brain. You talked about the data miners. What about multifamily buildings or EV chargers coupled with buildings or standalone EV charging stations? Obviously Tesla’s got a huge gas station business inside it.

Most people don’t realize it. They’re probably doing 50% of the job outside of homes, let’s say. But obviously they’re not the only brand that’s doing that.

And so do you see any growth in business there?

Jayson: 100%. Actually, funny enough, our EMS partner, Elexity, working with them is great because they also have partnerships with Chargepoint and a couple of those other big EV chargers.

Let’s just say you have a building and you want to throw in a couple of EV chargers there, we can hook our system up and monitor that EV station as well. And we can basically smart-monitor it to make it as efficient as possible in conjunction with our battery. If it’s a high demand time and we can still have some more output from our battery, then we can help shed that EV charging load off as well and stuff like that.

Kerim: You guys are doing this already in certain geographies? Can you tell me what states you see this? And this happens in like a multifamily apartment setting or a business?

Jayson: Actually, businesses are a big one.

Kerim: Fleets of vans or things like that?

Jayson: Now those ones are even better because they get into the larger scale equipment. But for the small, on the C&I, say you have like a dealership or something like that, most of them now have some EV chargers because they’re based on electric cars, right? We’ll bundle the EV side into, well, we don’t sell the EV charger, but we’ll essentially bundle the monitoring and the control into the package. And then we can provide that for you.

And then we have views of everything, right? From EV, HVAC, PV, our best unit, and we can optimize essentially the entire system, right? We’ve done that. Actually, I was just in California last week or the week before maybe, working on that exact scenario.

Kerim: For a car dealership?

Jayson: That exact scenario. But there are the instances where somebody wants to put in 20 chargers or something at this gas station, and then they want to use a battery. What they’ll do is they’ll charge that battery up on off-peak hours, right, when the electricity is cheapest.

And then they’ll use that battery, to help discharge whenever those are being used the most. That’s a really common application. I would say that we see people asking for that pretty frequently.

There are some really cool ones out there too, where it’s like, maybe they have a large piece of machinery that takes a lot of power, and they want to use a battery for that as well. That kind of stuff is pretty common. And really, in that type of scenario, it’s just about the battery covering the load of the vehicle.

That cent difference or the couple of cents difference in when you take the power in versus when you push the power out becomes big bucks, right?

Kerim: No doubt. Like we said, there’s going to be a lot of optimization opportunities at a micro level, and we’re going to need these VP of energy optimizations in many communities.

And they will be using systems like the ones that you’re providing. As we near the end of our conversation here, Jayson, any parting words or comments or wishes from the universe for what you’d like to see happen as we enter a new administration and talk about tariffs and China, US? You obviously work for a Chinese company too. Any last thoughts that you want to share?

Jayson: You know man, I mean, I love working for CPS. They’re fantastic. The only downside of working for a Chinese company is those 1:00 a.m. meetings every once in a while.

It’s not bad. No, it’s fantastic. I’d say the only wish that I have for the future moving on, and it’s already been happening over the past few years, is that people learn more and educate themselves on some of these benefits. I think that a lot of people now know of solar and of batteries, right? Solar more so than batteries.

But I think a lot of people are still scared of them. You have some horror stories. Like LG back in the day, stuff like that. We’re in such a better place now as far as the technology goes and what we can do with that technology.

And I would just encourage people to educate themselves. And if they have any questions at all, please feel free to reach out to me. My email is jayson.smith@chintpower.com. The Jayson has a “Y” in it, so J-A-Y-S-O-N.

Please reach out to me and I can help answer any questions that you have regarding the PV side or the BESS side and hopefully show you that the systems are not only safe and they’re not scary, but they can also provide you with a little bit more money in your pocket if you do it right.

Kerim: Jayson Smith, thank you so much for sharing all your knowledge and wisdom in this area. Thanks again and hope to repeat this in due time.

Jayson: Definitely. We’ll have another one where we dig a little bit more into the technical stuff.

Kerim: Awesome. Thank you.

Jayson: Have a good one.

Kerim: Thanks.