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Episode 1 - Origins of the Modern Battery Storage Business

Episode 1 November 26, 2019
Welcome to our second season! Over the next eight episodes, we’ll hear from people who’ve scaled new clean energy technologies, built market-changing companies from scratch, and managed big firms in the face of competitive threats.

Show Notes:

In this episode, a pioneer in storage who helped prove out the business case for putting big batteries on the grid: John Zahurancik.
John is the chief operating officer of a company called Fluence, a storage supergroup made up of teams from AES and Siemens. He and his co-founder Chris Shelton were some of the earliest visionaries in the grid-scale storage industry.


“I think at the beginning we faced every doubt, if you will. If there was a doubt to be had, it was mentioned to us. So I think it’s referred to as the Holy Grail because no one expects that you’ll ever actually find it,” says Zahurancik.


Today, lithium-ion batteries on the grid are surging. Just last year, the global battery market grew 140%, according to the research firm Wood Mackenzie. It’ll double in 2019. And it’ll triple in 2020.


Back in 2006, there were a lot of skeptics. But John saw something that the skeptics didn’t — lithium-ion batteries, when scaled, had the potential to completely reshape the grid.


In this episode, we tell one of the origin stories of the modern battery storage business.



Brad Langley: (00:02)
Devren, I’m nervous. Can you please do it?

Devren Hobbs: (00:04)
Do what Brad?

Brad Langley: (00:06)
Introduce the show. I mean, you’re in Boulder. I’m in Oakland. I can’t see you. You think after last season I’d have this down, but I don’t know. I’m just, maybe it’s butterflies.

Devren Hobbs: (00:17)
All right. Let’s kick this off. This is Illuminators. a show about the people and the forces transforming the business of energy. I’m Devren Hobbs. I run a product team at Uplight.

Brad Langley: (00:31)
And I’m Brad Langley. I’m a marketing director at Uplight.

Devren Hobbs: (00:33)
In this series we’re talking with the founders, executives and decision makers who are at the forefront of disruption in energy. What other stories tell us about this crazy competitive business world we find ourselves in?

Brad Langley: (00:50)
Welcome to season two. In our last season we learned from all kinds of industries; retail, consumer technology, manufacturing, and we applied those lessons to energy. This time around we’re doing things a little bit differently. Instead, we’re looking inward to the energy industry itself.

Devren Hobbs: (01:07)
So over the next eight episodes, we’re going to hear from lots of amazing people who have done things like scaling new clean energy technologies, built or maybe struggled to build market changing companies from scratch, or managed big firms in the face of competitive threats. In this episode we’ll talk to a pioneer in storage who helped prove out the business case for putting big batteries on the grid. His name is John Zahurancik. And John is the chief operating officer of a company called Fluence, which is this storage super group made up of teams from AEA and Siemens, or as John likes to call himself a unicorn farmer.

John Zahurancik: (01:43)
Yeah. At the time, this was kind of a crazy idea and I would say probably for the first five years we worked on it, it was a crazy idea. You know, at one point in here when people ask me what I did, I used to say, I was a unicorn farmer. You know, that we would find this mythical creature and do something with it that people didn’t really think existed. This grid connected battery’s doing something.

Brad Langley: (02:06)
So we’ve been looking for unicorns in all the wrong places. They’ve been underground this whole time. Either way, I mean the implication here is that the storage business isn’t easy. As a company that serves the energy industry, we can certainly relate to that.

Devren Hobbs: (02:21)
Yeah, it’s not easy at all. And that’s exactly why we wanted to talk to John.

Speaker 4: (02:25)
Joining me right now in a Fox business exclusive is the CEO of AES, Andrés Gluski. Good to see you, sir. Thanks so much for joining us. So what’s the story on battery technology?

Devren Hobbs: (02:36)
So today lithium ion batteries on the grid are surging.

Andrés Gluski: (02:41)
And so we today have more than 200 megawatts. We’ll be building out to 500. We have it in 16 countries. So for us it’s a proven technology.

Devren Hobbs: (02:50)
And this is a huge market. So just last year, the global market for batteries grew 140% according to Wood Mackenzie, and it’ll double in 2019, and the next year in 2020 it’ll triple. So companies like Fluence and competitors like Tesla, they’re in this arms race to build bigger and more sophisticated systems.

Andrés Gluski: (03:09)
It actually does it better than regular plants. Because say you have a gas plant that’s right to do the speaking, it has to heat up. It takes a few minutes to heat up. This is instantaneous and it’s cheaper. So it’s actually competing in many places. Well actually it’s competing without any subsidies. And this should be a very large market within five years.

Speaker 4: (03:27)

Devren Hobbs: (03:28)
And in fact, John’s team, they built the biggest battery in the world five different times already. And so all of this activity amounts to this global market that’s worth 71 billion over the next five years.

Brad Langley: (03:41)
$71 billion. That is a lot of scratch and a lot of those mythical unicorns.

Devren Hobbs: (03:47)
Right. So clearly John’s been digging in the right place, but let’s go back to 2006 before any of this played out. There were a ton of skeptics. The idea of taking the same batteries that we use in our phones and in our cars to essentially make a power plant. It was a little absurd. The technology was expensive, it was short lasting. But John saw something that the skeptics didn’t, that lithium ion batteries when scaled, they had the potential to completely reshape the grid.

John Zahurancik: (04:15)
If you look at the fundamentals of networks in almost every network we could imagine we saw that there was a form of storage. So when we looked around and saw water distribution networks, they have a reservoir. When you look at traffic networks, they have queuing from traffic lights. If you look at distribution networks, they have warehouses. So just as a kind of a principle, it seemed like if you came at and thought of things from a networking standpoint, networks have storage. Storage provides efficiency which lowers costs. It provides for non real time transaction. So it allows for improved resilience and you really didn’t have this in the power system. So we saw a very fundamental issue of the benefit of storage.

Devren Hobbs: (05:01)
This particular origin story of the modern battery storage business starts inside AES corporation. And if you’re not familiar, AES is a fortune 500 power company that has about 9,000 employees, big power plants all around the world and multiple utilities subsidiaries. And a disclosure here, AES is an investor in Uplight. And it’s where John and his co-founder, Chris Shelton, worked together in 2006 and it’s where they first started thinking about how to take these big lithium ion batteries and put them onto the grid. So when did you first start thinking about batteries in particular?

John Zahurancik: (05:42)
That’s a good question. You know, it’s been a long time now, but it was really back in 2006. Partner of mine, Chris Shelton, and I would always end up on these long flights together and thinking and talking about, you know, what comes next in energy. You know, where do we go next? And the more we did that, we really thought one of the most disruptive changes for energy would be if we truly got to a point where we had a large amount of electric vehicles on the road, and you started to have a significant boost in consumption of electricity. You know, we did some calculations and we were saying, well if you converted the majority of the passenger fleet and the heavy duty transport fleet, you start talking about a need for 20 to 30% more electricity generation in the United States. It’s pretty significant.

John Zahurancik: (06:36)
And the more we looked at e-transportation, and mobility, and other things like that, we found that a lot of that centered around the battery. And then we came across an article, actually an academic paper, that suggested that once we had this large fleet of electric vehicles, you would connect all these cars to the grid and you could do some really incredible, fantastic things on the power grid to manage it that we just couldn’t do today. And the more we started to look at this and think about this, we really got fascinated with the idea of what a battery connected to the power grid could do and how it could bring benefits across a whole range of solutions.

Devren Hobbs: (07:18)
It seems so obvious now, but I bet at the time this felt like a very new concept. Why weren’t people using batteries at this time, and was it a technology problem? Was it an infrastructure problem? Take us back to that period in time.

John Zahurancik: (07:32)
There were these papers, as I mentioned, suggesting the value of connecting batteries to the grid in the form of electric vehicles. And if you did that, how you could run the grid much more efficiently at less cost, with less pollution, and more resilience overall. And so we started to investigate whether these claims could possibly be true. Fortunately, we were working at AES at the time and we had access to a lot of information on how power plants ran, what services they provided in different power markets. One of the claims was that if you did this in New York, you would be able to generate a certain amount of value. So at the time, AES owned a series of power plants in New York. We called up the team that was there, my partner and I, and said, you know, “Do you believe these claims that are being made in this academic paper?”

John Zahurancik: (08:22)
This was a research paper by Willett Kempton from the University of Delaware. And he, you know, AES person on the other end of the line said, “No, no, no, this is crazy. These claims that this guy’s making, these are absolutely out of line.” He said, “There’s actually a lot more value to this than he has in his paper. If you had these kinds of connections, you could do much more with them.” And so that really was one of the early proof points to say, oh, there’s actually a series of things here that we’re already managing on the grid. That batteries or a device like we were starting to imagine could do much more effectively and with tremendous value.

Brad Langley: (08:58)
Wait. So John gets this bold idea. He gets on the phone with this guy in New York, he assumes he’s going to shoot it down saying it won’t work because it’s too bold, but instead the guy says this idea is crazy, but it’s because it’s too conservative?

Devren Hobbs: (09:13)
Yeah. So it was a big boost of confidence for John and Chris. But remember, everything that he’s talking about is mostly theoretical at this point. Batteries are still really expensive. No one’s developed a workable business model. And the market isn’t exactly demanding battery solutions yet. So the promise of storage is still very elusive. And that’s why John feels like he’s not just in the unicorn business. He’s also feeling a little like King Arthur on an endless quest.

Devren Hobbs: (09:40)
So at this point in time, it probably feels pretty theoretical, right? So what sort of doubt and skepticism did you face?

John Zahurancik: (09:50)
I think at the beginning we faced every doubt, if you will. If there was a doubt to be had, it was mentioned to us. So I think it’s referred to as the Holy Grail because no one expects that you’ll ever actually find it. The kinds of doubts that we faced were, you know, the fact that batteries had been tried in some places and failed, they wore out. You know, people didn’t believe that battery systems could provide the same kind of reliability that a power plant could provide. They didn’t believe it could operate and be controlled that way. That it would be too expensive, that you just couldn’t even put these systems together. If you did, they might have all kinds of negative repercussions.

John Zahurancik: (10:30)
So there were doubts in every way, both technical doubts. If you could put it together technical, could it be commercial? And if you could put it together commercially, could you get enough support behind it? You know, that you would actually invest in and build one of these things in a way that could get funded through the traditional mechanisms that power infrastructure was funded. So lots of doubts on every front.

Devren Hobbs: (10:55)
So despite all of that skepticism, what made you think that this was a bet worth pursuing?

John Zahurancik: (11:01)
What it turned out to be is if you were looking at the power industry from a traditional standpoint and looking at a power plant, you found that most of the money came from the creation of energy. Some of the money to fund that plant might come from a payment for existing as capacity from the potential that you could generate. And then a very small slice of value came for things called ancillary services. These ancillary services are critical grid reliability services that help make sure the lights don’t go out and they just keep everything humming along.

John Zahurancik: (11:32)
For the typical power plant, the ancillary services payment was very small. It might be 1%, it might be two or 3%, 5%, but in any case it was kind of this tiny little bit of extra that nobody was really thinking was that important. But when you looked across the whole power system and you looked across all of the power plants and added it up, that actually became a significant amount of money and it was a very critical job. And it was also a job that power plant operators didn’t like doing.

John Zahurancik: (12:01)
This is a job that caused the power plant operator to have to change the plant around to move the output up and down sometimes very rapidly. It’s something that they felt like led to additional maintenance and there were costs associated with it. What we were seeing is there was a value there. This value aligned with the idea of greater efficiency, lower emissions, and the technology was aligning to do this value. So I think those were things that we saw and as we looked out into the future, we saw a future where flexibility was going to be even more valuable in the future than it was today. Things that lowered emissions and had greater stewardship we’re going to be even more valuable in the future than they were at the time. So you know, we’re talking about this is 2006, 2007 time period. But we could see some of these trends moving in that direction and I think that gave the early team a real sense of purpose and mission around making this work.

Brad Langley: (12:59)
I know all too well how this story plays out in big companies. You have a couple of smart people, they get an idea, they put all this work into proving it, and then it just dies because there isn’t any process for pushing new ideas up through the company or worse executives just squelch it sight unseen.

Devren Hobbs: (13:20)
Yeah, I mean we talked about this in the last season a few times. It’s a real central problem with corporate innovation today.

Brad Langley: (13:27)
So Devren, you lead a project team. You’re somebody who is, you know, embraces big ideas. You know, someone like John on your team comes to you with this kind of idea, but it’s, you know, new and untested. How do you make sure it gets fostered and not forgotten?

Devren Hobbs: (13:45)
You know, I’d tell John to submit it to the Hackathon. So this is something we touched on last season and it’s a really important way for us to have a channel for everyone in the company to pitch new and innovative ideas. So the way it works is if you have an idea, bring it to the Hackathon, recruit a team of engineers, and product managers, designers, whoever can help make it come to reality. And we spend 24 hours in this intensive session where we’re building proof of concepts, and building a pitch deck, and there’s contests, and of course there’s ping pong and beer and lots of fun stuff happening. And we’ve actually had lots of product innovation come out of those Hackathons because it really encourages everybody to think outside the box and participate in this fun and interesting challenge. And so balancing that type of focused time on innovation against the other operational and day to day things we do is a great way to nurture those early stage ideas and see if there’s a there there.

Brad Langley: (14:48)
I can’t imagine the fire department and be too happy with us locking people inside the building, but I assumed you at least give them bathroom breaks.

Devren Hobbs: (14:54)
But there’s ping pong and beer.

Brad Langley: (14:56)
Well there you go. There’s no reason to leave then. All right, so back to AES. So how did John and Chris actually build, you know, a real storage business within a massive company where nothing like this existed at the time?

Devren Hobbs: (15:11)
Yeah, there are a couple things. One, they were lucky to have a structure where managers were encouraged to find and support these new ideas, and the executive team actually directly asked for new ideas. So when they got that chance to start the business, then they focused on these very specific use cases that felt familiar and proved the incremental worth of batteries.

John Zahurancik: (15:33)
When we came across this idea, you know, again, this was coming out on, you know, odd hours and long trips and this idea emerging. We began asking, “Hey, can we formally begin to talk to leaders in the company about this?” And fortunately Chris and I were both working for different managers who were open to the idea that we pitch this and get advice from other leaders in the company. So we went around and talked to various executive leaders and started pitching this, you know, and got a lot of great ideas actually. You know, companies that we could go to investigate possibilities, some of the things that we would have to overcome in putting together a business case. And eventually we did shape an overall recommendation and business case that, you know, we got to present to all of the leaders of the company.

Devren Hobbs: (16:18)
Can you tell us a story about one of your internal champions that helped guide you and put this proposal together? Was there any technique or tactic that you found that was particularly useful and moving this project to the next phase?

John Zahurancik: (16:33)
Yeah, that’s a great question. I would say there’s, you know, once we got our head around it and we were doing some of these meetings with individual executives, we formed an idea and we had the chance to present that at a business review that included most of the top level management of AES. And at that meeting we actually had a couple executives stand up and say, “If you can do what you’re talking about, we can use this in the places where I’m working.” One who was the business unit leader in Chile, the value there was very high. This was a case where AES was running a number of power plants in the area. Those power plants were relatively low cost producers of electricity, but in order to maintain reliability of that whole electric power system, the company was required to hold back 4% of the generating capacity of every unit that it had.

John Zahurancik: (17:31)
And so this 4% was not compensated. It was kind of like an obligatory operating rule in order for every generator to contribute to the overall system stability. And they were looking at what was the value of that additional 4% of energy they could sell at all times. This market was well over a hundred dollars a megawatt hour and their generator produced it at much less than that, and so you know they were saying this 4% every hour of every day is essentially value that they could be providing. They can provide more electricity to the citizens of Chile who were facing very high prices. The system was already built, the power plant was already there and if they could get away with something else managing this reliability job. You know there was a lot of value to them and to others for allowing those generators to put out more of its energy rather than keeping it in standby.

John Zahurancik: (18:27)
What we were able to do was show that the battery system could actually do that standby job, and kind of wait for an interruption or an outage, and then immediately put electricity onto the grid for a short period of time, up to 20 minutes, while they would ramp up other power generators in the area to cover for that outage. Quite a challenge to prove that. I mean, there were doubters. We had to go through the system operator that manages the grid for the country and convince them that this innovation would work as well as all the people in Chile.

Devren Hobbs: (19:02)
So does that mean you maybe weren’t even talking about batteries as much? That you were just talking about new technology to enable reliable power generation?

John Zahurancik: (19:12)
Yeah, we were really just talking about a different solution to the same problem. So one of the things that we found was the more we could make the innovation that we were describing look like something that people were familiar with, the more comfortable people became with it.

Devren Hobbs: (19:29)
And it worked. By 2009 the storage team put their first megawatt scale batteries on the grid to help manage power fluctuations over a short amount of time. And the batteries did exactly what they were supposed to do. But at this point they’re still operating like a lean startup. There’s only a handful of founding members of the team, everyone’s taking on as many roles as they can handle, and wearing a lot of hats. And there’s lots of moments where John wonders if these small projects are going to amount to something that’s market changing.

John Zahurancik: (19:59)
You’re on edge, you’re excited and thrilled because you’re doing something new. But every new obstacle that comes up is a whole a new hurdle. And for many years of this business, we lived with kind of the existential question; is this really going to go somewhere? You know, and how much farther can we go with this before, you know, we have to do something else? I think we had some very dedicated people that were very intelligent, very creative, and very inspired by what we were doing. And so that helped us to kind of look at one another and say, “Yeah, what we’re doing is worth it.”

Brad Langley: (20:38)
Wow. So that pretty much checks all the boxes for building a successful business within a big company, and certainly it’s not easy to do. It seems like, you know, they were successful. And you know, as I listened to John talk, you know, they’ve got a managerial structure that gives new ideas a shot, they’re being considered, there’s an incremental approach to scaling that business that focuses on immediate customer needs for batteries. And of course, you know, there’s a feeling that the risk being taken is for a bigger purpose, which I imagine keeps these guys going and keeps their team going. I have to imagine though, that despite the end of the story being a success, there must’ve been times where John’s resolve was tested and he thought maybe there is no hope.

Devren Hobbs: (21:27)
Yeah. You know, unfortunately it happens many times. There was this major project that was nearly killed in Chile because the grid operator got nervous. So they had financiers who got cold feet, and then early in the year battery cells from one project and Arizona caught on fire. So he’d seen it all.

Brad Langley: (21:45)

Devren Hobbs: (21:46)
But there’s this one project that fell apart just as the business was ramping up and just as the federal government was getting ready to invest tens of billions of dollars in clean tech through the stimulus.

John Zahurancik: (21:57)
One that comes to mind. We were doing a project in New York in 2010 time period. So we built this initial part of the system and at the same time we were building it, the federal government was going through the stimulus period and they decided that one of the ways they wanted to stimulate the economy, and stimulate development was investment in the energy sector. And they re-woke the loan guarantee program, the federal loan guarantee program that was intended to fund innovative new technologies that couldn’t get commercial financing.

John Zahurancik: (22:33)
So we thought, okay, this is great. We’re doing innovative energy technologies that can’t get commercial financing. We’re like the poster child for what the federal government should be doing at this point. And we have a great business case in New York where the cost of these reliability services is very high. New York has just created this program to allow alternate technologies to come in. We’ve actually had a project in development there. We’re moving along a very small phase of it, but we built it in such a way that the project could be expanded. Let’s do something crazy. Let’s do an enormous battery project. Let’s do a 20 megawatt battery. I mean it just seemed incredible size at the time.

John Zahurancik: (23:13)
Today we look back and think, “Oh gosh, that doesn’t seem quite so big now.” And we weren’t sure at how fast this would move along. But at the time it seemed quite large and we would go into the loan guarantee program and help the federal government to bring these kinds of innovative projects to life. So it was chosen by the department of energy. We went through a very long period of diligence and negotiation for this loan guarantee, and eventually arrived at, you know, assigned loan guarantee to fund the second phase of this project.

John Zahurancik: (23:46)
And you know, our part of the project was the initial eight megawatts was already constructed by this time period, and we were doing this long guarantee to really fund the additional 12 megawatts to bring it up to a full 20 megawatt system. We’re going down the road of all of the conditions precedent that you need to check off to get to the funding and all of a sudden Cylindra hits. This created all kinds of questions in the loan guarantee program about solvency and about how they had gone about doing things. And that ended up actually impacting a lot of different people in this. And so in the middle of, you know, thinking we had this funded, moving to the second phase of this project, all of a sudden everything really in the loan guarantee program froze. And long story short, we got to the end of this and they said, “Well, we still like your project. We select to move ahead, but we’re going to need to redo all of the diligence of the project if you want to do the loan.”

John Zahurancik: (24:48)
So we had spent more than a year working on this. Had spent a substantial amount of money on experts and others to make sure that things had gone. And at that point we decided that we would just terminate our loan guarantee. We had to go back to suppliers and negotiate out of commitments that we had made. We had to divert those to other projects. You know, it was a huge disappointment. So that’s one example. And I think our team just, we had to, you know, we had to pick ourselves up, you know, find a different way to go forward and we weren’t going to get the expansion that we thought, find another project, find another way. You know, continue to demonstrate creativity in what we were doing.

Devren Hobbs: (25:31)
So you have the certainty or what you think is certainty, but then it falls through. So what did you learn from the collapse of that project that you were able to take with you as the business grew?

John Zahurancik: (25:42)
Well, in retrospect, I mean, we learned a lot about what it was going to take to do commercial funding of these systems. And I think that was valuable. The federal government learned a lot about energy storage and I think that went into other parts of the recovery act where they started to fund grants for other kinds of programs. And so maybe I’m an optimist. It was very difficult at the time. It was emotionally crushing and disappointing to see that happen. There was a lot of explaining that had to be done in terms of how could this possibly happen? Didn’t we foresee this? Those kinds of things. But the process made us stronger. And a few years later we were able to take this small project we did in upstate New York and turn it into a precursor for a project that we offer to the Long Island Power Authority.

John Zahurancik: (26:30)
And so we went into this LIPA project where I was just talking about building a 20 megawatt facility and we ended up bidding a 300 megawatt, 1200 megawatt hour system. You know, something that was monstrously larger than what we were doing in New York, and even in what we had contemplated with the loan guarantee. But that ability to do that was fueled in part by the experiences that we had with that smaller system.

John Zahurancik: (26:55)
But that moment in Long Island actually helped convince regulators in California to move forward with a much larger program that eventually turned into the California Storage Mandate. So every one of these pieces builds on itself. And I think if you’re committed to focusing forward and you see the value of what you’re doing, it’s all about having those pieces line up. And we were very fortunate that we always had enough things moving forward that when one of them fell out, you know, we were able to kind of quickly reorganize ourselves and focus on the things that were still moving forward.

Brad Langley: (27:32)
Wow. That’s actually a pretty incredible chain of events. You know, the California Storage Mandate was nearly a gigawatt and a half of batteries and it basically created the modern storage industry. You know, John’s drawing a pretty clear line between the project that failed and could have almost cost him the entire company. And one of the most important pieces of storage policy of all time.

Devren Hobbs: (27:54)
Yeah. This is why you need both patients and vision as an entrepreneur, or an intrapreneur in John and Chris’s case, to get through the worst times. And companies supporting this new line of business, they need to share in that vision because failure can actually result in some pretty surprising outcomes.

Brad Langley: (28:12)
So Devren, what eventually happened with the storage team?

Devren Hobbs: (28:15)
Well, as we said, the storage market has come a long way. So lithium ion batteries are way cheaper, projects are much bigger and they’re starting to become a viable alternative for replacing traditional power plants. And then back to John and Chris’s team, well, they had an exit of sorts when the AES storage business merged with Siemens.

Speaker 6: (28:35)
The need to store energy has never been more critical. And now the next big thing in energy storage. Introducing Fluence. Siemens and AES have joined forces to form the first truly global energy storage technology and services provider. Fluence. Transforming the way you power your world.

Devren Hobbs: (29:00)
They now have a hundred projects in development or built within 21 countries. And Fluence is building projects that are many orders of magnitude bigger than just a few years ago. In some cases even replacing natural gas. Grid scale battery storage has truly arrived and it all started with an academic paper, a couple of curious employees and a power giant like AES that was willing to take a risk on them.

Devren Hobbs: (29:25)
So in thinking through all of the projects to get storage off of the ground, and some of the setbacks, and the obstacles that you faced, how much of your ultimate success was due to perseverance and grit versus just waiting for all those external pieces and factors to come together?

John Zahurancik: (29:45)
Well, you know, I would say there’s not a lot of substitute for grit and endurance. Those are certainly kind of fundamental traits. And even today, you know, as this, AES energy storage businesses evolved into what we call Fluence energy now, you know, we still look for those kind of grit, perseverance. We call it ownership and diligence. We look for those traits very heavily. I think the thing that we found is that they’re not divorced from one another. So your endurance, your grit, the actions that you take can actually have an impact on things falling into place. You don’t have perfect control over it, but if you are working on something that is aligned with, you know, the longterm trends of where things are going, and you’re working on something that has fundamental value, and you’re working on it persistently and trying to create opportunities for it to move forward, you actually end up changing the trajectory.

John Zahurancik: (30:47)
It’s not a matter of waiting around for something just to fortunately fall on your lap. And it’s also not a matter of you get to control and make everything happen if you just try hard enough. But I think if you seed enough opportunities in the right direction and those are lined up in the right way, you actually can have some control, so over things that will eventually come out. So the, you know, the first thing we did in Indiana led us to PJM, and PJM led us to Chile, and Chile’s success, you know, led us to New York. You know, New York had some modest success, not what we wanted, but it led us do a project in West Virginia that led us back to another project in Chile. So there’s a lot of work that you can do to build upon itself and to allow you to create opportunities for tomorrow out of what you’re doing today.

Devren Hobbs: (31:41)
So I love this story because it started as almost like a mini startup within a big company. So I’m curious, what advice would you offer for others who are in a similar position who have this big idea related to energy and moving the grid towards cleaner energy, et cetera? How do you get that started? Something so innovative and so different within the construct of a much bigger company. What advice would you give somebody?

John Zahurancik: (32:10)
Embrace some of the criticism of the people that are raising concerns. You know, those are the kinds of things that you’re going to need to overcome. And so you might not be able to overcome all of them on day one, but they’re representing views that you’re going to have to confront and deal with. And at the time they can feel just like naysayers or they can feel negative, but they’re actually doing you a favor. They’re telling you all of the things that you’re going to have to figure out and have an answer to. So collect those and then structure them and figure out, well what of these things could we prove now? How could we show somebody right now that we’re taking progress on one or a collection of these things? And what’s the smallest step that we could take forward to do that? And then based on proving that out, if that proves to be correct and we still think our innovation holds, what’s the next step?

John Zahurancik: (33:02)
So kind of align these things up in sequence and then knock them off. Because if you can take some of those objections and disprove them, and then move to the next set, and the next set and do that in a kind of a disciplined manner, that’s what people want to see. You know, they want to see how do you deal with those items?

John Zahurancik: (33:22)
And then I would say on the flip side, look for your champions, you know, where there’s concentrations of value. You know, we found our best champions were in places where there is either a lot of value that that person could see and they were looking for a new solution for it, or there were big problems, and real challenges in a business that they were looking for a solution. The bigger the challenges are, the more somebody was willing to do something that was nonconventional, something different, as a way to solve the problem. And so sometimes problems can be the biggest source of inspiration and provide a real incentive for somebody to do something different. And so mind those problems for an opportunity to innovate.

Devren Hobbs: (34:04)
All right. Thank you John. Really enjoyed chatting with you today. It’s an incredible story and I loved hearing all about it.

John Zahurancik: (34:11)
Thank you. It’s great to be with you.

Devren Hobbs: (34:13)
John Zahurancik is the chief operating officer of Fluence Energy.

Brad Langley: (34:22)
I’ve had the pleasure of meeting people at AES and that story doesn’t surprise me at all based on how they really embrace innovation. And that story also hits all the themes of this show. Intrapreneurship, finding inspiration from other industries, market transformation. It really is on the nose.

Devren Hobbs: (34:41)
So Brad, what’s coming up next?

Brad Langley: (34:43)
In our next episode, we’re going to hear from Donnel Baird. He is the founder of BlocPower. Donnel is going to talk with us about applying lessons from community organizing and failed green jobs programs to his company, which is focused on getting distributed energy to buildings in inner cities that need the most.

Devren Hobbs: (35:00)
Illuminators is a podcast from Uplight, a software and analytics leader changing the way the world uses energy. To learn about our journey as a supergroup of energy entrepreneurs and how we’re helping the biggest utilities, think more like Amazon and Netflix, go to Uplight.com

Brad Langley: (35:17)
And if you liked this show, we hope you do, please support us by subscribing and then send out the word on social media or rate and review us on Apple Podcasts. You can also find out more at uplight.com/illuminators.

Devren Hobbs: (35:30)
Illuminators is produced by Postscript Audio in collaboration with Uplight. Stephen Lacey and Daniel Wardorf are our producers. Our theme music is composed by Title Card Music and Sound. I’m Devren Hobbs.

Brad Langley: (35:42)
And I’m Brad Langley. This is Illuminators, a show about the people and the forces transforming the business of energy.

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