Dylan Morris, Stone Power | theCUBE + NYSE Wired: Powering Tomorrow

Palo Alto studio connecting Silicon Valley and Wall Street. >> I'm John Furrier, host of the Cube here with Dave Vellante, my co-host. Hello, I'm John Furrier, host of the Cube here in our NYSE Cube studio, of course. We have our Palo Alto studio connecting Silicon Valley to Wall Street. It's our deep tech conversations around powering tomorrow, which is a play on words, but it's about the energy impact. AI is bounded by energy. There's huge demand for it. Dylan Morris is your founder and CEO of Stone Power. Great to see you. Thanks for coming in. >> Yeah, thanks for having me, John. >> So, you're an entrepreneur. You're tackling the power problem. Um you guys have a unique approach. First, explain what you do, then we'll get into how you got there. >> Yeah. So, we are Stone Power is a is manufacturing large power generation turbines. We are an OEM. Uh we're going up against the you know the the legacy incumbents, and we're doing that with with with really solving two problems. One is how to design a turbine faster, right? So, we are we're injecting AI into our product development cycle. And then secondly, we're manufacturing them faster. So, we're designing for manufacturing as well as building factories larger than ever ever been seen. >> Well, I got a lot of questions from my kids and even smart people that didn't even know what a data center is. So, explain a turbine and why it's important on the energy equation. >> Yeah, yeah. So, um so there's a there's a handful of different turbines, but all of them you can think about them turning heat into power, right? So, you you have some arbitrary heat, whether it's from a reactor or geothermal, you know, or natural gas, and and you turn that into usable power for the grid. And so >> it's really important. >> It is incredibly important. It is really like 80% of the global grid, 80% of it runs on a turbine, right? [snorts] So, if you want more power, you need to be in you need to be in Stone, right? That's that's exactly where where we're [clears throat] we're building the next next generation of power. >> All right. So, um you mentioned geothermal. That's another area, but at the end of the day you need turbines. Where where did you guys come in on this? How did you get here? What was the entry point? What was the what was the breakthrough? >> Yeah, the the entry point is really about it's about market timing as well as our ability to simplify the the current natural gas turbine. So, as you know, many of these data centers are set being set up behind the grid because or behind the meter because the grid is has long interconnection queues, blah blah blah. >> Unreliable, spiky, all kinds of problems. >> All sorts of problems with it. Not saying that behind the meter is all that much better, but at least you have control over it, right? And so they're often being set up with natural gas turbines. Well, if you're trying to buy a natural gas turbine here in in 2026, you're sold out to 2031. If you're going to GE or Siemens Mitsubishi Solar, right? Whoever you go to. >> Supply constraints big time. >> Incredibly so. So, it's a there's a lot of market pull for this technology. And secondly, we're able to build out the factory on it. We're we're able to build out the technology and the AI AI enabled workflows on a on a product that we know will work, right? We know that natural gas turbines have been around for literally 50 years and it's pretty well pretty well established. And then lastly is like if you if you really take a first principles look at the design of a natural gas turbine or any turbine, you realize that they're kind of designed for the grid of the 20 for the 2000s, you know, where like there was no batteries on the grid, high renewables. And there's so much there's so much easy simplification to be had on the design. And so we're we're tackling there and that's what allows us to have you know, some of the world's leading emissions emissions profiles and and one of the one of >> a modern approach. You're saying, "Hey, what do we have around us today? How do we engineer this for rapid scale, get them pumped out as fast as possible? Demand's there, obviously." All right, so with the status of the product and I knew you guys are pre-revenue cuz you're just getting [clears throat] started. Take us through the progress. Where are you guys at now? >> Yeah, it's a really good question. So, we are we have validated our emissions technology as one of the really important components of our ability to to deliver the best product. Secondly, we have one of the world's best turbine teams. We have like 20 engineers from, you know, GE, Siemens, you know, the whole the whole gamut, Pratt & Whitney. And and now we're we're delivering our first one 1 MW subscale engine. That'll be delivered in the next 2 weeks. And and then following that we have our 50 MW engine by the middle of next year. And and you know, filling up the pipeline fast. >> what kind of forecast on the power you guys looking at delivering? >> We will have about 5 GW by 2030. >> 5 GW of net new turbine power, you know, generated by Stone power. >> Well, okay. So, let me just back up and try to grok that for a second. So, I see these gigawatt factories. They're like thousands of acres. Big campuses. >> Yeah. >> Huge build-outs. >> Yeah. >> Are you working with them? Do you see it being different? What's that distinction between the people trying to stand turn on, I guess, is the better word? >> The the AI factories? Yeah. Um there's a Our our best customers are going to be those large large gigawatt factories or AI factories. Um >> [snorts] >> and that's because like these these smaller ones, you know, >> Because they want reliability. >> They want and they want redundancy, right? So, we we picked 50 MW 50 MW size because you can actually put them in in in have a couple on spare, you know? And and that's going to be really important for for our customers to be able to get proof points on our product, but also have incredibly high uptime for their customers, right? >> So, 50 MW is a good footprint. It's a meaty edge node. You can go out and deploy that in metro areas. >> Mhm. >> Edge positions, telecom towers. >> Oil refineries often are right around that size as well. >> So, you have more kind of targets to to deploy. >> And that that's the reason why we picked that. Really came down from like our our customers were like, "Hey, we don't care about anything less than 200 MW." It's like, "Okay, I need the ability to get to 200 MW like on our pilot." >> Yeah. >> And so >> Well, they want the big power cuz the big factories need large scale. But I was asking I always ask people this question, what's a beefy edge node? Because you know, AI factories are these big centers and it's distributed computing, right? You have a big big fat node and then you have connected nodes to the factory. So, you know, everything from a telecom tower to a central office >> Mhm. >> to a data center in a hospital. Those are nodes that connect to other intelligence. >> Indeed. >> So, what would be a meaty edge from a megawatt perspective from your standpoint? 30 to 50, 20 to 50? What would be like to be have to run a good intelligence layer assuming that they can get the gear? There's a lot of gear out there they can get, you know, on a rack. >> Yeah, so Nvidia's a standard standard size puts what's called a scalable unit at about just under 50 megawatts. So, that is you know, that's a perfect perfect size for like, hey, you you know, you have a block, you have a complete standardized, you know, IT load, right? You know how to set it up and that those are super scalable. So, that that might that might answer your question. >> Talk about the the optimization. What are you working on now? Because you guys are getting going. >> Mhm. Mhm. >> You're going to revenue soon. What's the focus? What are you optimizing for? >> Number one right now is is we are we're we're focusing on getting our first demo out, 1 megawatt delivered to our customers. Okay, let's go through the whole cycle of of you know, going from blank sheet to turbine to delivery of a of a thing. That's that's hard and complicated on its own. But then but then it's digging into the 50 megawatt cycle and and going through the whole project plan. I mean, this >> And just get some turbines out there. >> Right. I mean, it really it's it's really what it is what it's about. I mean, we're solely focused on delivering turbines that you know, look there's there's a lot of expansion opportunity afterwards, but we nothing none of that happens without delivering your first turbine. >> Talk about behind the meter and versus the grid because this comes up a lot in this series because the grid There's two philosophies. One is the grid is unreliable so we have to figure that out behind the meter. There's also talk about feeding the grids. >> Mhm. >> Coming in from large gigawatts coming in or feeding local areas. You know, so one company is like, "Hey, we're going to do geothermal and we'll just power the entire Pacific Northwest." Okay, well they have you know, if they can succeed. So there's a lot of these projects. How do What's your philosophy? >> Yeah. Yeah, I think I think the right way to do it is how PJM's doing it which is, "Hey, uh, we will speed up or or or change your interconnection queue if you bring your own power and then and then you know, have that as an option to to sell back your capacity." Um, that is definitely the right way to incentivize the ISO to actually like go fast enough to for the interconnection um, while also you know, uh, bolstering you know, the the the the local grid uh, by bringing that power. I think I think that's the right um, opportunity and uh, and it also I mean it it it makes those initial behind the meter uh, purchases of power assets actually like uh, you know, real cash flowing assets for the durability of that of that engine, right? >> Yeah, you're in a great spot. I mean there's a lot of demand. In April I wrote a blog post that said energy is not only the bounding function but finances. And then since then we've seen a wave. Nvidia just came into the city a couple of weeks ago. Big uh, consortium of banks, investors. >> Oh, yeah. >> So there's a financing angle here. How are you thinking about your financial capital? Where you guys at now and what is the financing plan? >> Yeah, no, this is a So we're we're looking at probably a trillion dollars a year of CapEx spend, you know, not us but the the entirety of the of the industry before 2030. Like very soon, right? Like where are they going to get all that money, right? Um, so for so however for us, right? We're like we're investing uh, a couple billion, probably 1.8 to 2 in um, into a forge. This is a again part of the manufacturing forward, part of it is like if you look at the bill of materials or the cost of a turbine, so much of it's actually spent in the supply chain. It's like, okay, why are you giving that margin away when, you know, they're also the bottleneck, right? So, you know, like we're we're doing that very pointedly only on a few things, but the forge is very important. We're the only ones that that can extract the the value from that. Um and then and then of course we also have project financing and of course you know, venture equity. >> What's your needs now from a head count standpoint? You guys looking to expand? Put a plug in for what you might be looking for. A lot of people love this area. >> Yeah. >> I mean you got mechanical, you got computer science, you got a lot of science going on and you got the supercomputing capabilities as a potential support there in modernizing the materials. >> Yeah, so I'm a materials engineer, man. This stuff really gets me excited. So, we are we're looking for to deliver our first turbines of about 50 people. I really don't think you need much more than that. And we're looking for mechanical engineers, turbomachinery engineers, people who have actually worked on turbines and delivered hardware before. Everybody at Stone Axe delivered hardware. And and of course, you know, we're looking for like one maybe two specialized operators who really understand, you know, how to use AI in in the back back office. >> to get this right. That's your focus. You got to get this off >> 100%. >> out in the market as fast as possible, learn the lessons, >> Yep. >> rinse and repeat, >> Exactly. >> so to speak. All right, so what's your vision on energy in general because a lot of people don't understand the importance of it. There's a lot of protests. I don't know where this gets politicized, but you know, you have a regulatory back drop on all this. Now it's gone into the AI. People going to get think AI is going to kill them, which is ridiculous. >> Totally. >> But this is an economic opportunity. I mean I I think data center build-outs are a lot like, you know, you know, when a baseball park comes to a city, you know, it gentrifies. >> It can. >> Yeah. What's your vi- That's my vision, but that's weird, but what's your vision on on the future of energy and what it can do for folks? >> Yeah, I If you look at like where the where the grid ought to be, like how do we What are the distribution of how we get our energy? I think the top 30, 40% of it will be solar batteries um and maybe some geothermal in there. Um and then the bottom half is going to be turbines, right? Now, there's a couple different types of turbines, right? You have your nuclear and you have your natural gas, but uh but I truly believe that's that's where the grid's going and wouldn't have like a marvelous expansion opportunity to be able to reduce carbon emissions, reduce NOx emissions, um all all the bad stuff that is currently coming off our grid um you know, for the climate is and then and then secondly, be able to bring in energy abundance, right? Like like I started off this story with like 30% of the cost of goods sold out of a textile mill was electricity. So, if you take out that 30% and you bring it down to 1% or 2%, what it you know, you're you're you're bringing about material abundance, right? And that's why um that's that's truly what's driving driving me and the rest of the Stone team here is bringing about uh energy abundance which drives material abundance and >> We we take the We take electricity for granted, but you know, the demand, some will say, is more than the powering homes in the in the United States. >> Mhm. >> What is the grid? Cuz people ask me all the time, what's the What's problem with the grid? I mean, people don't know how antiquated it is. >> It is. >> Explain >> Yeah. >> from your standpoint, you know, it is built wasn't built in the modern era. Yet, it needs an upgrade. >> Mhm. >> It certainly is a target critical infrastructure. It's a target on a cybersecurity standpoint, why? >> Absolutely. >> But that aside for a second, but just from a functionality standpoint, this is a huge national issue that affects everybody. >> Absolutely. Yeah, so uh there's a there's a couple of, you know, uh interconnection services uh that you know, that that manage what comes on and what goes off the grid and and then do you have utilities that actually are usually publicly owned um that will that will actually like invest in that new infrastructure. Problem is they've been the incentives there are kind of been misaligned for quite some time where they are incentivized to spend more on less, right? By having just more expensive projects that take longer. And so >> Pork barrel projects as they're called. >> As they're called. >> I could say that. You won't say that. >> Yeah, I won't say that, but you can. Thank you. Some of these are my customers. Um so >> [laughter] >> Uh >> I mean, but they just haven't been optimized for this. That's their cuz it's been business as usual. >> Mhm. Well, this this whole market's been over financialized, right? I I it has been it has been stripped of all the use useful parts. It has been, you know, divested in all these different ways. Um and and frankly been brought been put overseas. And, you know, it made sense when the market was where it was, which was completely stagnant for 20 years, right? And like 1 or 2% growth. Well, now we need 20. How do we get to 20% growth? Right, that is that is where a vertically integrated, you know, founder-led, you know, energy and engineering-led company is able to to to really grasp a lot of that growth. >> It's hard for an existing incumbent that's to scale up that growth because you have economies of scale problems. You don't have a lot of learnings. It's really tough. You need the entrepreneurial perspective. >> Mhm. >> Great stuff. I mean, Dylan, I guess what's your North Star if you had to look, you know, for a preferred future? >> Mhm. >> What's it look like? >> We'll be delivering 10 gigawatts a year by 2030. Uh that that will be our production rate. And so everything that we're doing um everything from my capital stack that we're that we're touching through the technologies to the team is is oriented around delivering that. >> Well, thanks for coming on our Powering Tomorrow series. It's a new series. There's a lot of energy behind it, pun intended. Thanks for coming, and congratulations on the venture. >> John. >> And looking forward to chatting again. >> Appreciate it. >> I'm John Furrier, host of the Cube's Powering Tomorrow put on our NYC Wired series, part of the Cube here at the NYSE. Thanks for watching. >> Yeah.