How AI & Analytics Are Transforming Grid-Scale Batteries

In this episode of the CTRL+Listen Podcast, host James Sweetlove sits down with Lennart Hinrichs, Executive Vice President and General Manager Americas at TWAICE, to explore the rapidly evolving world of battery energy storage systems (BESS). Lennart breaks down everything from the basics of lithium-ion battery types and grid-scale applications to the California duck curve, state-of-charge challenges, and how TWAICE's cloud-based analytics platform helps operators maximize performance, prevent failures, and avoid costly grid penalties.

The conversation dives deep into battery degradation, imbalance detection, preventive maintenance, and the role of machine learning in extracting actionable insights from massive datasets. Lennart also shares his perspective on how AI-driven data center demand is reshaping energy infrastructure, the state of the global battery supply chain, tariff impacts, and why solar-plus-storage may be the most practical path forward for grid stability. Whether you're an energy professional or just battery-curious, this episode is packed with real-world insight.

Resources from this episode:

• Learn more about TWAICE
• Connect with Lennart

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Key Takeaways

• Grid-scale batteries (BESS) are becoming essential to grid stability. Large, front‑of‑the‑meter battery energy storage systems are critical for balancing renewable generation, managing the “duck curve,” responding in milliseconds to grid fluctuations, and avoiding blackouts, especially as solar adoption and AI-driven data center demand accelerate.
• Battery performance hinges on data, not just hardware. Lithium‑ion BESS generate massive volumes of data, but real value comes from advanced analytics that turn raw signals into actionable insights—accurate state‑of‑charge estimation, imbalance detection, degradation tracking, and early fault identification—to prevent underperformance, penalties, and safety risks.
• Degradation and imbalance are the hidden economic risks. Batteries degrade unevenly over time, leading to charge imbalances that reduce usable capacity and power availability. Without proactive monitoring, operators can fail grid commitments and incur significant financial penalties. Smart analytics enables preventive maintenance, augmentation planning, and revenue‑optimized operation.
• LFP batteries and solar‑plus‑storage are the near‑term winners. Lithium iron phosphate (LFP) has emerged as the dominant chemistry for grid storage due to safety, longevity, and supply‑chain advantages. Despite hype around alternative chemistries, incremental LFP improvements combined with solar‑plus‑storage are currently the fastest, most practical path to reliable and scalable clean energy infrastructure.

Transcript

James Sweetlove: Hi everyone, this is James from the CTRL+ Listen podcast brought to you by Octopart. I have a guest for you. This is Lennart Hinrichs. He's the Executive Vice President and General Manager, Americas, from Twaice. Thank you so much for coming on the show. It's great to have you.

Lennart Hinrichs: Great to be here, James, and looking forward to talking a bit about batteries today.

James Sweetlove: Yeah, me too. I have a lot I want to learn here. It's an interesting topic for sure. So just to start with, do you want to tell us a little bit about yourself and your background?

Lennart Hinrichs: Sure. Contrary to most of the rest of Twaice, I am not an engineer by training. I started my career in consulting, and I met two extremely talented engineers back in 2017 who were telling me a wild story about optimizing batteries. At that point, I honestly thought, my car battery, does that really need replacement, the small starter battery? But they were, of course, talking about electric vehicles, and they had already started doing the research at the university into optimizing and understanding battery degradation. And I joined Twaice back then for the founding, so I was part of the extended founding team there. I have since been in different roles within the company, really building the commercial side of Twaice. And since 2024, I'm responsible for our Americas business. So everything here from sales, marketing, and post-sales delivery, working with customers to ensure that their batteries are performing and safe.

James Sweetlove: Fantastic. So do you want to tell us a little bit about Twaice itself then?

Lennart Hinrichs: Yeah, sure. I hinted at that. Stefan and Michael started their research into batteries in 2014. Actually, the first thing they did was develop a stationary battery with the phenomenal capacity of, I think, 200 kilowatt hours. So by today's standard, very, very small, but it was already an LFP storage. They looked into that. They were exploring the idea of second-life storages. And if you look into second-life storages, one thing becomes extremely important: understanding the actual state of the battery. How good is it? How can you make it work up to the standards that you need? To do that, they developed the software that we now call battery analytics, cloud-based assessment of batteries, which then became Twaice in 2018.

So we really take any data of a battery energy storage system, so the big grid-scale batteries, and that is anything related to cell data up to any kind of transformer PCS data, bring it into the cloud, process it, and make it actionable. So that is available in different solutions to optimize the performance of storages, meaning availability, how much energy you have to conduct arbitrage or ancillary services, and to ensure that any kind of defects on the system are detected well ahead of time before they cause any maintenance issues or, worst case, safety issues.

I think a lot of people have seen the fires that happened. I also want to make a point there that this is very, very rare, and it's a lot safer than, for example, any internal combustion engine car or even generators. But there have been notable fires, and it's really important to preempt that. And I think we can go deeper into the topic of battery safety. Just a look out there: it's usually not the battery itself that causes fires, it's everything else in that larger system that might rather cause that.

James Sweetlove: Right. So I actually want to do something super basic here. It might seem silly to you, but the conception of batteries, I think, might not have caught up in some ways with how fast battery technologies advance. So when you say batteries, can you just give a rundown of everything that's included in that term these days?

Lennart Hinrichs: Yeah, I think it's great to cast the net a bit wider here. And I think the battery most people are familiar with is either the little AA batteries that you put into your remote controls. That's usually not lithium-ion. So when I refer to batteries, we are mostly talking about lithium-ion. And then within the lithium-ion families, there are different cell chemistries and form factors, but I think the application areas are relevant here.

And I think the most notable ones are consumer electronics, which would be mostly the phone battery that you know from your iPhone or your Samsung devices, or whatever you're using. And then you have another huge application area, which is electric vehicles, and that is both plug-in hybrids, mild hybrids, and fully electric vehicles.

And then what I'm mostly concerned about is what we would call stationary batteries. There are generally three categories that we are referring to. That is residential, which is what you would have in your house to store the energy that comes from your solar plant, for example, or your solar roof. Then we have what's referred to as C&I, commercial industrial batteries, behind-the-meter applications to ensure either uninterrupted power supply, to hedge against power outages, or to do what's called peak shaving. So if you turn on your engines and you have this massive energy peak, to shave that off in order to prevent the grid from charging you excess fees.

And then what we are mostly focused on at the moment, and that's the massive deployment that we are seeing, is front-of-the-meter, big grid-scale batteries. So we are looking into hundreds of megawatt hours of storage, sometimes gigawatt hours of storage. So that's just for scale understanding, that's up to a couple of thousand shipping containers full of batteries.

And to tie that back to what that is, you can imagine the iPhone is like one battery cell, and there are (indistinct) form factors, so there are a lot bigger cells. So a very big thick book, or a couple of books, I guess, could be the size factor of a battery cell that is put into these grid-scale batteries, and then you have hundreds of thousands of these put in series and parallel that ultimately then get charged and cycled to do what they do, which is stabilize the grid.

So a very common application, and I'm not sure where the audience is on that, but you always have to produce exactly the amount of energy that you're consuming in the grid, in the larger area. So that's usually done by your utility or ISO/RTO that is balancing this out. And we now see a huge deployment of solar, of course, and wind, which means that the generation is fluctuating a bit. In combination with demand fluctuating, people use more energy when they're at home at night, you might see data centers coming online now consuming huge amounts of energy and also using that infrequently. So you need something to stabilize that, to counter that intermittency, and that's what batteries are brilliant for.

So charge, for example, throughout the day, that's a very typical application in California, charge throughout the day when there's plenty of solar, and discharge in the evening when you have a lot of consumption. And there are different applications as well beyond that, but that's one of the main areas that is very understandable for the audience.

James Sweetlove: Yeah, definitely. Thank you. That clarified a lot. So one more clarification question. On your site, before we started talking, I saw that there is what you refer to a lot as a B-E-S-S asset, a BESS asset. Can you please explain what that is and how that integrates into the energy market?

Lennart Hinrichs: Yeah, exactly. So BESS is, I think, the term that has now been commonly used for the grid-scale batteries. So it's a battery energy storage system, so it's really the idea of tying into a grid and providing grid services. Depending on the area, it's slightly different. So in California, we see a lot of this balancing out what is referred to as the California duck curve, and I love this term. It's quite visual, and essentially it's the residual energy that is needed after accounting for renewables.

So you do see it start ramping up in the morning when people wake up, so more energy, then solar comes online so you get this dip, which could be the belly of the duck, I guess, and then in the evening solar goes down, people come home, so residual energy requirements go up before people go to sleep at night, and then it drops down and you get the peak of the duck. And the batteries really move from that belly to the neck of the duck, so you balance all that out, and that means that you do need fewer conventional resources to stabilize the grid.

Other elements are that batteries really react within milliseconds, so if there are frequency variations in the grid, batteries can very quickly counter that and ensure that all electronic devices work perfectly. And there are different market mechanisms, from capacity markets to energy markets, that help compensate batteries to do that. So it's really a commercial operation usually done by large utilities or independent power producers that use that like any other generation unit or power plant would be used, except, and that makes it interesting, of course, a power plant is only generating energy and a battery can generate energy, but it can also consume it, or it has to consume it, in order to later give it back into the grid. So it creates this bidirectional charging, which is also causing a lot of challenges or novelties for grid operators to really incorporate batteries to their full potential into the grid.

James Sweetlove: Right. No, that's fascinating. Thank you. I think understanding both of those things is very helpful with this conversation, so I appreciate that. So now I want to get into more of what your company does specifically, so let's talk about analytics work in the battery space. How does this differ from, say, standard analytics, like standard data analytics?

Lennart Hinrichs: So I don't think it's fundamentally different, right? If we look at the wider analytics space, there's always the idea of, A, you need data. And the beautiful thing with batteries is there's plenty of data. Batteries are fully digital systems. Usually there's even too much data to make that a good business case to capture all of it, so you need a smart data strategy in the first place to get all that data into the cloud and then have that actionable there.

There are certain elements associated with collecting that data, including the contracts with the integrator of the battery or the OEM of the battery, but ultimately it should always be the goal to have a reasonable amount of data in the cloud. And that's what we help our customers with. And then after securing the data, you clean the data, you make sure that all the outliers are cleared out so that you don't get any noise within the data. And then once you have that data lake or data warehouse available, it's about interpreting that data. So that's adding advanced KPIs on top of that, looking into degradation.

What is degradation? We mentioned the iPhone example earlier. I think everyone knows that if you get a brand new phone, it's going to last easily the entire day. And then a year later you'll see that at around 6:00 PM, it may already be getting low on battery, and then a year later that might move forward to 4:00 PM and then you need to charge throughout the day. It's the degradation, the capacity fade that you get on batteries. So understanding that is one element, calculating that, but what is also very relevant is knowing how much you still have in the battery, so the core capacity of charge.

Now, in an iPhone situation, you might actually know that at some point you might get this weird twitch where the battery drops from 40% to 0%. Now, on a larger scale, that happens quite frequently. Different factors play into that. The most commonly used cell chemistry in the battery space at the moment is LFP, lithium iron phosphate batteries. That has one unique physical property, an open-circuit voltage that is extremely flat in the medium SOC windows. So if you operate a battery not from zero to 100%, which you might see in your phone case, but rather between 20 and 80%, or for ancillary services maybe around the 50% mark, which is very common, you will have a big challenge actually understanding what state of charge the battery is at. So that's number one, getting the state of charge on cell or rack level correct.

And then the second challenge is that because it's so many different battery cells, and within these containers there are such diverse conditions, there is an effort, of course, to keep it very similar, but you do naturally get temperature gradients and resistance deviations within the storages. So you get an issue that's called imbalance, which means that certain cells have a higher charge than others. And what that means is the first cell that actually reaches 100% will mean that every other cell will stop charging as well, otherwise you'd overcharge that specific cell. Well, you counter that by rebalancing it, to charge from one cell to another, to make it simple. And that is costing you time and money because you can't operate the storage during that time.

So you get these two elements of a very hard SOC reading and then imbalances in the system that you need to counteract with balancing. So recalibrating the SOC and rebalancing the system are two very common maintenance procedures. And our software helps with really understanding all these mechanisms and giving you the real insight into the battery. So what's your actual SOC, and what's the balancing status of the battery? So you can dissect in the battery what is lost capacity due to degradation, what is currently not available because you have imbalances, and where is your system currently reading the state of charge wrong, so where does the system think it has more or less energy than it actually has, and what's going to be that impact on discharge?

Because what's happening is these batteries, of course, form that crucial element for the grid. So if they are being asked to discharge and then can't because imbalances hit and there's a derating on the power, so instead of providing 100 megawatts, suddenly the storage only generates 80 megawatts, there's a problem in the grid because you don't have enough power to actually keep the grid stable. So it's a massive issue, and therefore you as a battery operator get slapped with huge penalties.

So our software helps by calculating all these advanced KPIs to provide any operator with all these key strategic insights into the battery performance. And then on that next level, you go into that preventive maintenance element of really flagging components that are causing the system to underperform or components that could cause potential safety risks in the future. And I hinted at that, that's not always the cell. There are elements of manufacturing defects, there are elements of degradation that mean that you have weak cells in the systems, they should be replaced, but a lot of actual fire or safety incidents are caused by failing controls, so overcharging or deep discharging of battery cells.

So seeing where the BMS, the battery management systems, the control systems, are making mistakes and then flagging that and fixing that, or really understanding where in the larger balance of system there are issues. So with the HVAC system, are there temperature anomalies that need to be addressed?

So really bringing this back up, what is Twaice doing? Twaice provides you this comprehensive software suite that takes all your data and, for an asset manager, gives you the daily, monthly, weekly reports of the performance of your storage. How are we doing in the market? How are we benchmarking against the contracted energy toward our offtaker, and how is our supplier benchmarking against what they contracted with us? Down to the more performance engineering side, really going into how many cycles did the battery do, how much energy throughput are we seeing, what is the current balance of the system, do we need to take preventive action? Down to the operational level, really, what are the current alerts that are coming in, what action do we need to take, how can we make sure that this battery is operated to its best potential?

James Sweetlove: I see. And this applies the same way for an energy grid battery as it does for an electric vehicle battery, same concepts?

Lennart Hinrichs: The underlying algorithms work for both applications. So as a fundamental physical idea, yes. Now, in the car industry, in the vehicle industry, if you've ever owned an EV, you'll know that OEMs, the manufacturers, the Fords, GMs, BMWs of this world, are doing their best to really keep all that technical challenge away from you. So you will get a warranty that lasts for 10 years, or eight to 10 years. It's going to be 160,000 miles, and essentially they're telling you, "Don't worry about the battery." So the only thing that you are worrying about is, "How far can I go with it and how quickly can I recharge it?"

Now, because the batteries are smaller and because they're generally cycled to a higher degree, and they're usually charged to 100%, the entire balancing aspect of the SOC calibration is better, but you do maybe see occasionally that there are glitches in the SOC and you see these jumps. And also, to be fair, cars usually have an NMC cell chemistry. Tesla, I think, uses some LFP batteries. There's a move toward that. But with NMC, the SOC determination is significantly easier.

But, yeah, I think in the car, what you want to achieve there is long-lasting batteries and to make sure that you've got this range. Now, the other element, of course, in the car that is different from a stationary storage is that in the stationary storage we see batteries that we call duration. So four-hour duration is quite common in California. It is rather two hours in Texas at the moment. There are discussions about long duration, meaning eight hours.

Now, what that means is that a storage is providing the nameplate power for that time. So, say, a 100-megawatt four-hour battery would have 100 megawatts for four hours. In order to achieve that, you put 400 megawatt hours of capacity on site. You probably need to oversize it because you'll get derating on the lower and upper end, so maybe having 440 megawatt hours. So that discharge at 100 megawatts means you're using only 0.25 of that entire capacity, so it's what's referred to as 0.25 C.

Now in the car area, you generally have the requirement to have more power, you want to accelerate. So if you have, in an average car, a 70-kilowatt-hour battery, you do want more than 70 kilowatts in energy out of there, especially for charging, quick charging. At the station you generally see charging up to 350, 400 kilowatts nowadays. So that is, instead of having 0.25 C, you suddenly have 4 C. So the stress the battery is getting is coming a lot more from that discharging and charging, so it is a lot more radical in the use of the batteries. So the cyclic degradation of the battery kicks in a little bit more.

Having said that, also, cars generally don't get used every day, so a battery isn't fully discharged every day, ideally. To make the most money, a car may be fully discharged every two weeks. So that's the other element, I think, in terms of usage of batteries and how these age.

But coming back to what Twaice offers there, yes, we do work with the OEMs as well to analyze the batteries, to provide better next-gen battery packs as well, but that's a lot more about degradation, like when will we see a significant amount of car batteries reaching their end of life, reaching the 70% SOH where they need to be replaced to still be usable.

James Sweetlove: Okay. So I was going to ask you about the degradation side of things later, but let's talk about it right now. So how can someone actually monitor or minimize degradation, and what role do things like simulations play in making sure that happens?

Lennart Hinrichs: That's a very good question. So degradation generally, there are a multitude of factors that come into play here. The outcome is generally a capacity fade, meaning there is less capacity over time that is usable, and a resistance increase, which in the grid-scale area generally doesn't play a role because you have these low C rates. In the automotive space, this could translate, for example, to lower charging speeds with older batteries, just because the resistance is increasing.

Now, there's generally a combination of calendric aging and cyclic aging, meaning basically calendric: it's just sitting there and it's slowly degrading. Cyclic: because we are charging and discharging all the time, this movement of electrons is ultimately causing the degradation. Now, depending on the use case, one or the other might have the upper hand.

Now, how can you prevent that or how can you optimize that? That's the crucial question here, and that's where simulations come into play, really understanding, "How is my use impacting that?" So, again, in the car case, automotive companies take that away from you. There's very little you can do. What does impact it? High C rates are not ideal, so quick charging is not ideal if you don't really need it. It probably doesn't make sense to do it. Then again, the cars have safety buffers in there, so it shouldn't really be something of concern. If you're planning to park a car, for example, it's probably not ideal to charge it to 100% and have it sit there for the winter. Again, the reason why a lot of car manufacturers recommend only charging to 80% instead of 100%, and recommend that only just before long trips, is that a fully charged battery is under stress, and if it then sits there with cold temperatures, et cetera, it will accelerate calendric aging.

Now, on the grid-scale batteries, of course it's a slightly different use case, and that's very interesting because these are really optimized for revenue. So you want to ideally earn the most dollars per percentage of degraded capacity, so understanding whether your full cycle is actually generating these extra dollars, or is it just degrading the battery more? So really understanding, "Okay, how do we get the most out of our battery?"

Now, interestingly enough, I think most companies operate them too conservatively and can go more aggressively oftentimes, not as a universal statement, of course. But the challenge I think we see on the grid-scale side is more that with degradation you get more imbalances. And because each cell is degrading slightly differently, imbalances building up over time might cause more and more problems. And in the grid-scale area, you can do something that you can't do in a car, which is you can mix and match batteries, so you can replace modules between the containers if they're light enough. It depends a bit on the architecture as well. And you can do something that's called augmentation, which means you add additional batteries just to ensure that you meet your nameplate power. So that's to counteract that degradation.

James Sweetlove: Okay. Interesting. Yeah, it's a lot of interesting stuff here. People don't think about basically any of this on a daily basis, so very eye-opening, thank you. So let's talk a little bit about some of the stuff that you offer. I had a question about services you offer between asset management and performance and operations, so how do their needs differ in a space like that?

Lennart Hinrichs: So it is interesting to look into the market and to see the different modus operandi of companies. We see increasingly companies taking over more of that stack. I think historically people were trying to stay away from the batteries as much as they could, so they would buy a fully wrapped system. Tesla is an example, by the way, of someone providing that. So you go to Tesla, you pay them the CapEx, they put the storage there, and then you pay them an OpEx fee for them to keep it going. You almost get no data. You know when they're charging, when it's discharging, and what the state of charge is, and then very limited data points beyond that. And they just take care of the battery to operate smoothly. There are excused outages for them to conduct maintenance, but you don't touch it.

So from an asset management perspective, you probably just want to see, "Okay, what's the performance of the battery? What are they telling me about the current degradation, and how much money did I make with it?"

Now, I think it's swinging a bit more to the other side now, where people are starting to really question, "What is my battery actually doing, and how can I optimize it, and how can I squeeze a lot more performance out of it, given that these systems go into the hundreds of millions in investment?"

So performance engineers on that side are really looking and combing through the data and understanding what is putting any drag on the system, where are we losing capacity, where are we losing performance, and how can we optimize that. And nowadays we even have one customer that has an onsite maintenance team, so the moment something pops up they run out there and start fixing the batteries or the PCS, the power conversion systems, immediately just to ensure that the battery is always in perfect condition.

And that's really down to this idea of you usually have an offtaker, or a market that you're trading into, so are you meeting the demands of that offtaker? Are you having sufficient power and sufficient capacity available? And you do have an overbuild, but if you're eating into that overbuild, A, it's usually the aging reserve, and B, once you meet these thresholds and you fail a capacity cycle, for example, you really do get this challenge of penalties that you need to pay.

Now, what does that really mean? How is that different? An asset manager is more of a financial person, really looking at the performance overall with a good technical understanding, whereas if we are going into the operations and maintenance, it's really, "How are we driving the storage? Are we charging, are we discharging, which part are we replacing? Do we need to run updates here? What are the work orders that are going out to our suppliers and service providers?" And really going into the nitty-gritty part of the batteries, down to understanding the time series data that comes off the battery cells and modules.

James Sweetlove: Okay, no, that makes total sense. Thank you. So I wanted to talk a little bit about something else that's on your website, which you have a lot of resources on there. I had looked through some of those, some really interesting stuff. Was there anything in there that you would recommend people check out if they're trying to get a base understanding of some of this stuff?

Lennart Hinrichs: Yeah, thank you, James, for that. I really think our marketing team did a phenomenal job there, and it's part of what we see in the market. A lot of people from solar, wind, or even thermal generation assets are moving into the battery space, and that means that they're not that familiar with the terms, with the requirements. So I would really encourage using the battery encyclopedia that we have on there, which is a glossary of the most important terms if you're new to the industry, really understanding this. There are very good assets as well about the data structures that you need in order to be successful in understanding and operating a battery, but also explaining the most important terms in terms of the performance of a battery, the safety, walking you through that. And I think that's a good starting point if you're interested in batteries.

James Sweetlove: Yeah, for sure. I had a look at that encyclopedia, and as someone who's not an engineer, I was like, "Wow, okay. A lot of stuff to learn here." So no, it seems very useful, honestly. So I want to ask about something that everyone's excited about. This is the buzzword right now, AI. What role does AI play in the analytics side of what you do?

Lennart Hinrichs: Yeah, so it's a very good question, and we get it a lot. And I think I always—

I mean, we have it in the name, and we had it in the name. I think it was already cool then, but it was a different idea about AI, and that's still what we use, mostly what I think is commonly referred to more as machine learning. So really applying numbers-driven AI, less the LLMs that you see with ChatGPT and Claude at the moment. So really using machine learning models to get insights into large amounts of data.

Now, there are, of course, applications where you want to use LLMs to contextualize the outcomes of that analysis in order to make the actionable insights quicker or more applicable to the specific storage situation, so mapping that with, for example, maintenance manuals. But generally, we do use a lot of the more traditional machine learning applications in this area to ensure that we get more precise KPIs and then can package that into usable solutions.

What is interesting, I think, at the moment looking at the energy grid, is that AI becomes a major driver for energy demand, and we see that all the data centers that are coming on the grid are just putting so much stress on local grid infrastructure and overall generation. And if we are looking into, "Okay, how are we going to provide all that energy?" people are talking nuclear, but nuclear takes 10, 15, probably 20 years to actually build. Gas peaker plants, the supply chain is in shambles at the moment. It takes years to build. But what really is quick is building solar and building storage, so we are seeing a massive ramp-up there as well. And in particular, the way that data centers pull energy from the grid almost makes it absolutely necessary to have a big battery combined with the data center to balance out these peaks and to just act as an uninterrupted power supply so that they meet their availability targets.

James Sweetlove: For sure. I think the issue with nuclear, as well, is the regulatory process is so extensive and drawn out. By the time you've even gotten approvals to start building stuff, you could have built several other energy supply systems.

Lennart Hinrichs: And if I can add something there, I know that there have been discussions about batteries and safety, and I know especially in California they just tightened the regulations around that after the Moss Landing fire. And there is sometimes local opposition to batteries, which are extremely safe, and the worst thing that can happen is a fire. And I don't think there was any contamination ever proven in the local water. And now, just thinking through the idea of SMRs, small modular reactors, and seeing that there's already quite significant opposition to batteries, I don't even want to imagine what the opposition is going to be to having a mini nuclear plant in your neighborhood. I think there is still a lot of road ahead of us if that's really the future, and I do believe at the moment that the combination of solar with very low levelized cost of electricity combined with storage to balance out the intermittency is really a very, very powerful combination that should be leveraged. It's up and running very quickly, and it does provide very reliable energy.

James Sweetlove: Definitely. No, it's very true. So I wanted to take a step back from looking at the company and look a little bit more at the sector. I'd love to ask, and it's a broad question, so feel free to answer however you want, but how has the battery sector changed or evolved in recent years, and what would you say some of those biggest changes are?

Lennart Hinrichs: I think, if we look at it from technology, the way that the supply chain works, the way they're operated, and then maybe an outlook there as well, and market design. So I think, one, we started with car batteries put into stationary battery storage systems, and that has separated. I think we now see batteries being developed specifically for grid-scale batteries and specifically for cars, and we do see that the lithium-ion family has advanced dramatically. So now the predominant cell chemistry in grid scale is lithium iron phosphate, which is very safe, reliable, long-lasting, and operating for a long time, and there are still NMC high-performing batteries in the car sector. So that has specialized extremely strongly now.

I know there has been a lot of talk in the past about solid state as the more performing element for cars and sodium ion as an alternative to lithium-ion, especially for grid scale, with the idea of sodium being basically absolutely abundant and easier to source. Now, it turns out lithium isn't actually as rare and as expensive as people thought a couple of years ago. The performance figures of LFPs are so strong that I see very little case at the moment for that next transition, and I think rather there's going to be optimization on the LFP side for the foreseeable future. Never say never, but I don't think the projections of sodium ion actually taking over 20% market share until 2030 are going to happen. I think that's going to be predominantly LFP.

Looking a bit at the development and how batteries are being used, I think in the car industry, that's a pretty steady adoption rate. In the grid-scale area, I think we see this move away from the complete integrator model where you have the Fluences, Teslas, just providing a fully wrapped solution, more toward either the OEM/DC blocks, meaning the original cell manufacturers providing the entire container, and then you add the power electronics yourself, to that more self-managed, self-integrated approach, with the companies getting more and more professional with batteries, understanding them better, so taking on more risks themselves and also more responsibility in ensuring how they work.

And then lastly, I think the most relevant one is why did we see such a build-out of batteries in California and now in Texas in the US? It's the market design. It's the price structures that really benefit batteries. So in Texas it was the peak pricing that you got for rare weather events. So essentially you didn't really need to use the battery for 350 days a year. It would basically not contribute to your revenue, and then you had the rare weather events where peak prices just meant that if you had energy available and could discharge in these time slots, you just made the entire return off the battery very, very quickly.

In California you have that capacity market where you just get this daily cycling, which is paid out. And I think in Europe now we see this massive build-out of the storage assets because the markets are now starting to account for that. Texas, I think, is very notable. I think this podcast is going to be published in February, so maybe we already see the results of that, but in December Texas, so their ERCOT, is going to release RTC plus B, meaning the plus B for the batteries, to really account for what batteries can do. And I think their estimations there are, A, it is going to save billions of dollars for the operating costs of that grid, but ideally it's also making the use of batteries more efficient and attractive to build out the capacity that is ultimately going to prevent any load shedding being necessary in rare weather events or actual blackouts.

James Sweetlove: Right. Huh, very interesting. I've been following this on the side, some of the innovative stuff people are trying with battery tech as well. Have you seen any of the stuff around earth batteries, building them with sand instead of precious metals?

Lennart Hinrichs: Yeah, I think there's always a lot of hype about new battery technologies, new battery approaches. For me the key question is always, how can you scale that and how does that pan out on the business sheet? And I think at the moment there is really no viable alternative to LFP. The sodium-ion idea is out there, and I think there are some other cell chemistries that are being tested. Ultimately, you need to be outperforming the existing technology quite significantly in five years because that's probably what it takes to really commercialize and get the production scaled up.

Now, if the existing technology in five years is also moving, then by that time do you still have a big performance differential that allows, or justifies, big investments in new production capacity and in changing the entire tech stack? Possibly. And I'm very much aware of the innovation S-curves, where there might be a very strong improvement on the performance side, but I haven't really seen any technology out there where I would at the moment be so excited and say, "This is going to be a game changer."

I think there's going to be a lot of incremental changes on the electrolytes side and optimizing anode and cathode materials to take out some of these rarer materials, but LFP already is lithium iron phosphate. That's not really using any of the critical materials or minerals that kind of— I mean, cobalt was one of the elements that really caused a lot of headaches on the NMC cell chemistry because of the supply chain and the child labor that is used in Africa to source it. That isn't being used for LFP batteries anymore, so that makes the supply chain already a lot easier and—

Okay, interesting. Really looking out there, I don't see anything at the moment that is going to massively turn the tables here.

James Sweetlove: Oh, good to know. So you touched on something which is my last question for you, which is supply chain. With the battery supply chain, obviously there's a lot that goes into it. You said it's being simplified to some extent. Can you tell us a little bit about how things like regional conflicts, recent tariffs, or the pandemic, for example, affected battery supply chains?

Lennart Hinrichs: Yeah, so the truth is that 90% of the battery production, I think it's 90%, don't necessarily quote me on exactly that number, but it's in the ballpark, is coming from China. And that is not only the cells, that is also everything in the refinement of the materials toward that. So recent regulation, the OBBBA, has left the ITC for batteries untouched, so that's good. You still do get the tax credits for building batteries, but it has tightened around what is called FEOC, Foreign Entity of Concern, considering that batteries are critical infrastructure, which makes a ton of sense. That needs to be protected. Certain entities can't take more than a certain percentage of the project, and I think that's changing over time, it's increasing, of the project. So mostly Chinese cells become more and more difficult to be incorporated and still be eligible for ITCs.

Now, combining that with the tariffs that are being slapped on Chinese products, you suddenly see something that used to be extremely cost-competitive being on eye level with American-made cells, just because you don't get the ITC and because you do have the tariffs. Now, the question for the long-term vision will be, is it worth investing in local capacity to build this up? Now, building a Gigafactory is a couple of billion in investment, so that needs a long-term vision that these tariffs and these FEOC requirements will stay in place. And I'm not sure there's huge confidence in the market yet. I know that companies like Fluence are putting their bets on it and saying, "This is going to stay and we are investing in local production, and therefore we'll take a benefit there." But I think that remains to be seen.

And I think at the moment there are companies out there that say, "Well, you're still better off just buying Chinese cells and not getting any ITC and not getting the tax credits, but having a reliable supply chain that is ultimately cheaper, and it is a very high-performing cell, it's very good quality." I think we'll see that shift a bit toward other supplier countries like Korea and, of course, local production that's going to increase in the future. So that is definitely happening, but that is a challenge, and I think that is a reason that at the moment there's a lot of uncertainty in the market. And people are racing toward safe-harboring the batteries that are already in construction, and there's a bit of a question mark about what will happen afterwards and what technologies they will actually source to build the batteries in 2027 and onwards.

James Sweetlove: Interesting. Yeah, great to know. Last question, super simple one. If people want to get in touch with the company, see your offerings, anything like that, what are the best places to do that?

Lennart Hinrichs: So we are very open, showing our products proudly on our website. So if you go to Twaice, you will be able to sign up for demos or watch videos of the product. We are also happy to send out self-guided demos, so you can reach out to me, which I hope there's an email address that we can put somewhere in the description or so, because I'm not going to spell my surname here. But there are lots of contact forms on the website where you can reach out, and then we can just share some more details or jump on a call with you.

James Sweetlove: For sure. We will have the website link and your LinkedIn contact in the description of the video, so people can reach out as they need to. Lennart, thank you so much. This has been, honestly, very eye-opening. I understood a very basic level about batteries, and I think you've helped elevate that a bit today, so I appreciate your time and the level of detail that you went into with everything.

Lennart Hinrichs: Thanks for having me, James. This was a pleasure.

James Sweetlove: Anytime. And anyone who's been listening, thank you so much for tuning in. Come back next time, and we will have another guest for you.