Bala Ramamurthy, CEO, Critical Loop | theCUBE + NYSE Wired: Powering Tomorrow

Palo Alto Studio Connection Silicon Valley and Wall Street. I'm John Fost here with Dave Vol, my co-host. Welcome back to the Cube studio here at the New York Stock Exchange. I'm Jim Allen, co-host of NYC Wireds Powering Tomorrow. And today we are talking about how AI and this world has never needed as much power as it does this moment right now. And America's power grid is basically saying get in line. Critical loop is trying to solve that bottleneck using batteries, software, and modular power systems to get businesses powered in weeks rather than waiting years for the grid. Bala Rama went from helping making SpaceX Falcon 9 safe for humans to tackling one of the biggest infrastructure problems of this boom. Bala, welcome to NYC Wired. >> Great to meet you and uh thanks for having me on. >> So, you've had a pretty fascinating uh backstory. You were at 12 years at SpaceX. And like I mentioned there in my opening, we're heavily involved in the mission that was Falcon 9. You're now solving for what is essentially one of the biggest challenges of this technical revolution and era we're in. Maybe give me a little bit of the backstory. Vala, talk me through the OG moment of reckoning where you thought, you know what, I'm going to go ahead and set up this company and solve one of society's biggest challenges. >> Uh yeah, that's a great question. I love solving complex systems problems and to me next to spacecraft and you know going sending astronauts to space some of the most challenging problems that exist today that are fundamental to how every industry operates is uh energy like uh you can't do modern civilization without energy in some format and um and power specifically meaning uh how much of it you can get uh in the amount of time you need is is a major challenge uh and I've worked in factories in different capacities throughout my career and I was beginning to think about you know re-industrialization the changing supply chain and kind of the challenges that needed to be sort of mounted to set up a factory in the US and one of the things seems to be that you need power and utilities have challenges to deliver sufficient power fast enough and this seemed like a really fascinating and important area to address uh industrial customers consume a lot of power and you know form like some of the key underpinnings of the modern grid. And so uh yeah, it was kind of a deep study into that problem with my co-founders that kind of led to this idea of why don't we tackle industrial power solutions uh and figure out how to get megawws to people much quicker than the you know utility interconnection currently allows. So when you hear it explained like that, you think, "Wow, you know, that's a no-brainer, right? Let's just solve for the grid by building our own miniature version of it." But that's also highly complicated. There is, I'm sure, many, many, many reasons that the grid and the challenges that we have around energy and power in this country are as they are. Talk me through the layers by which you need to create this, right? because it's kind of software, hardware, politics, regulatory all combining into one product like unstack it for me. >> Yeah, absolutely. Uh the New York Times did a really cool article recently about like the importance of transformers and some of this grid infrastructure and that kind of tells you like you need to build this complex hardware to to uh that requires you know a deep set of skills uh sourcing materials in order to make grid upgrades. So the challenge we're seeing now uh in the modern distribution grid is that for the first time in many decades we're having load growth. That is people are consuming more power and that's because new factories are getting built. Uh electric vehicles have emerged, computation is happening at the edge, right? You have uh the neo cloud setting up uh their little data centers in different areas. So all these things are and also just the fact that the grid is old and is deteriorating all this leads to the fact that you need to upgrade the grid. So that that is often challenging requires permits and and and requires a lot of capex and so uh the solution that critical loop looks at is like how do you you know the grid is fundamentally still underutilized. So there's this concept of grid flexibility like 50% of the grid is not used. It's like when you think about such an underutilized asset, you must use it better. So what critical loop does is that we take whatever power is available from the grid, store that in batteries which are reducing in cost and can be deployed and is an advanced technology at this point. Um uh we can deploy that at the point of consumption like where the industrial customer is consuming that power. We throw batteries there. We suck in as much power as we can get from the grid. If there's supplemental generation at the site, solar or otherwise, we, you know, inject that power into the batteries too. And then we're able to deliver that power that, you know, can't be delivered over the traditional wires to the, you know, in the quantity that's needed when, you know, certain peak loads are happening. You know, your peak, you know, AI inference happening or, you know, your heavy machinery kicking into gear. All these things consume a lot of power instantaneously. And you know what we do is like we have batteries that bank this power and let you you know serve that power when these machines are running and and so yeah go ahead. >> If I can kind of interrupt you there for a second. You're selling batteries but you're also selling time though, right? You're also selling capacity. Like >> how like describe that to me, you know, like what's the elevator pitch here if you're talking to a potential customer? >> Yeah, the elevator pitch is the following. like you know let's say the utility can only give you 5 megawatts of power they can give you a certain amount of power and uh you know how can you increase that that power amount that the utility can provide is you usually determined by you know whatever the main constraint is at that portion of the grid it could be a transformer it could be wires it could be thermal limits during a very small portion of the year so the the value proposition is like hey you're you might be gated by this problem that is occurring over a limited period of time and uh until that section of the grid is upgraded, you're going to need uh a bridge solution to get as much power as you need. So critical loop offers a really flexible energy service agreement where the customer is basically just leasing capacity, right? You're just leasing capacity from uh from critical loop to you know store and manage that power for the customer so that they can use it when they need it. Um, and so the pit pitch is quite simple like sign us, sign up with us for a lease for these assets and we do all the orchestration. We determine, we do a power appraisal. We figure out how much power you're, you know, based on the loads that you're going to have at the site. We determine like what's the equipment that needs to be cited there. We get it permitted. We install it. We manage all all of it with automation and software that reduces the operations and maintenance. So we really try to provide this experience to the customer where like you just you should just be able to you know demand power and get it and and and we like to be able to deliver that experience to the customer. >> And the business model it's capacity based, it's subscriptionbased. How what are the economics of this? >> Yeah. Uh typically it looks like a multi-year lease for like the batteries and other equipment at the site. effectively that people are leasing energy capacity from us and um and then you know there may be other services that they might request from us for maintenance but effectively it's like you can think of it as quite simply as a lease. And the data side of this is very interesting, right? Because you're obviously remotely monitoring this kind of miniature grid that you've created within all of these substrates of customers and looking at like you mentioned their capacity and you know loads and trying to understand how how to utilize. Talk me through like that side of this business like you're obviously learning a lot you know. Is is there also a data play within this like kind of longer term? Absolutely. Like um you know we're sitting at the customer site intercepting kind of all of the loads that are happening at the customer site. So we understand sort of the challenges to be able to you know achieve the requirements that the customer needs like nowadays modern CNC machines for example or modern computers and you know uh data racks like these things have these interesting patterns of power consumption that might stress like the traditional grid but having sort of these inverter and battery based assets at the site allow us to kind of smooth over some of these issues and This data is really critical. We telemetter and monitor all this data. Of course, it's like private to the customer and we can't share it with others, but it really allows us to serve the customer exactly the solutions they need. As the problems and new needs emerge, as new loads come on at the customer site, we're in the best position to sort of expand and give them additional capability. >> You know, we think about the world of like smarter cities, right? like this type of data would be so useful if it was actually created in a collectively useful way. I want to ask you about I guess my my kind of devil's advocate here is when I hear of a company like this and a technology and a use case like this I think why hasn't Tesla or Eaton or any of those other large companies just created their own version of this already? like why why has there been such a dependency and somewhat of kind of I guess I may dare I call like a toxic dependency on utilities for so long. >> Yeah. I mean uh the I think the key realization about the critical absolution that we came to is that it's not a solution that is completely independent of the utility. We're just better utilizing what capacity the utility has and delivering sort of the gap that the utility can't realize today. Um I think all of these companies are trying to solve or participate in this market in different capacities like some of the manufacturer equipment. Uh some of those manufacturers equipment critical loop might actually use. Uh but I think what's unique about critical loop is that we can orchestrate across like a wide range of these assets. We can orchestrate across batteries made by different manufacturers, batteries and generators made by different manufacturers. And we can control all of that and really provide this like operations and maintenance layer that allows people to kind of seamlessly use when you use the grid you just assume everything is going to work. And so that's kind of the experience we want to deliver and that really requires all this like software and orchestration across assets. So I think that that flexibility and ability to incorporate, you know, we're not wedded to we're we're a systems integrator in the best way in that we can pull, you know, all the available resources at a site and, you know, it doesn't exclusively have to be critical loops hardware in some cases. And so uh that that's uh that's kind of I think how we stand out. Talk me through some customer examples, some clients, companies, manufacturing sites you've worked with and what is the deployment like? Like how quickly can it go from a sales conversation to actual more efficient power management like live on a manufacturing site? >> Yeah. Um you'll be hearing more about this in the coming months but you know across California we have a few campuses that we're working on industrial power solutions for where basically in each of those cases the utility was able to offer like say like five megawatts of power and then critical loop was able to step in and use all of our orchestration and toolkit to get that power to 10 megawatts like double effectively the available capacity at the site. Uh some of the examples that we've talked about and uh in public uh include like terowatt infrastructure. We manage the micro grid at the San Diego airport uh where basically you know uh it's a critical infrastructure facility. Um and we've done stuff with like folks like cover which manufactures uh ADUs like we've managed to power their site. the setup. All our hardware is kind of designed to be rapidly stackable in a sense like you know we can deploy very quickly to a site uh once permits and other things have been issued and received like it's very easy for us to go integrate our hardware into the site and commission it really quickly. Um and you know we we've actually done uh like rapid response cases where we've set up the whole system like let's say a megawatt scale micro grid um in like a matter of hours. Um uh however like for I'd say the typical experience for like a permanent fac for a facility that's going to you know where our assets are going to sit around for a few years you know is on the order of a few months to work to through different permits and like you know sourcing the hardware and getting it to the site. >> Wow. Well, there's certainly a time for this. That is for sure. So, Vallet, last question to you. Talk me through the stage you guys are at as a company. I believe you raised Series A this year. You've some interesting investors. You know, what's ahead? I mean, it sounds like a pretty capex heavy business too, right? Batteries and this type of spend ain't cheap. So, talk me through the next kind of 12 months. Like, what's on the road map? >> Yeah. Uh, those are some great points. Critical is about, you know, 40 person plus company. We're actively hiring folks uh but we're you know expanding and we have live deployments with the variety of customers today. There are about like 70 control nodes across California where you know we have um you know there's like telemetry and live power operations that are happening at all these sites and um we we've managed to kind of keep um kind kind of we've managed to figure out the best methods to finance some of these projects like you know we take advantage of every incentive we have the ability to you know find the right type of capital to deploy the capex uh this is actually a very lucrative uh way to spend capex because you know we can uh basically own these assets for a long period and you know take advantage of utility programs and maximize like how much value we pull out of the assets at a given site and I think one of the key tools that we have is that we've made all the batteries and all the systems that solve these bridge power problems relocatable. So we have the actual ability to physically relocate these assets to new sites when you know we're done solving a bridge power problem and let's say the utility upgrade has arrived. I think that's been a critical element of exercising this energy capacity, you know, energy service agreement lease model uh is the ability to for the customer to not have to foot that entire capex and instead critical loop does we are able to lease it to them, make good returns and then continue to extract value out of the asset over its useful life which can be like a couple of decades. Well, multi-purpose mobile assets that you can sweat over a prolonged period certainly sounds like a very attractive investment thesis. Bala, thank you so much for joining us on NYC Wired. >> Yeah, great talking to you today. >> I'm Jean Allen here at the Cube studio at the New York Stock Exchange. This is NYC Wired powering tomorrow. Thanks for watching.