In The Arena by TechArena - Powering AI with ZincFive’s Sustainable Battery Solutions

Episode Date: October 2, 2024

Tod Higinbotham, COO of ZincFive, discusses the role of nickel-zinc batteries in supporting AI workloads, improving data center efficiency, and advancing sustainability in power infrastructure.

Welcome to the Tech Arena, my name is Alison Klein, and I am delighted to be with Todd Higginbotham, Chief Operating Officer of Zinc5. Welcome to the program, Todd. How are you doing? Great, Alison. Thank you. Now, Zinc5 is somebody that I've been following for a long time, but you guys have never been on the show before. Can you just do an introduction of the company? Sure. Well, Zinc5 is fundamentally a battery company. So we developed technology around nickel-zate batteries, which are a specialized battery. We formed the company in 2016. The technology was developed through a couple of efforts prior to that, but we merged two companies and formed the company in 2016. And since then, we're based in the Portland, Oregon area, just a little bit southwest of Portland in a town called Tualatin.

Right now, our profile is right about 250 employees split between China, where we own our own facilities and manufacture batteries, and the U.S., where we import those batteries and turn them into backup power systems and other types of battery-based systems. When you look at AI, it's placing incredible demand on data center computing. Everyone is talking about its promise, but also the challenges of actually delivering this compute to fuel this transformative workload. How does that impact power requirements in brownfield and greenfield data centers? What do you see the trends looking like? Yeah, sure.

Well, it certainly felt like it came all of a sudden. A lot of the big technology trends, even though they've been evolving over time, but really rapidly coming into the market. The first thing, of course, is just a large quantity of power required. So when you look at the growth, people estimate 30, 40, 50 gigawatts of new capacity for data centers just for AI over the next several years. So the first one is just broadly power availability and where that power resides. And then when you get down inside the data center, you probably think of it a little bit in a time phase. If current data centers that are built, they take anywhere from two to five years to develop a project, build it, and then fill it with clients in the case of co-location.

That time phase right now, clients, people who want to use AI and AI-type applications want to go into those data centers from now, even though they've already been built. So they were built for a CPU-type environment, and now you're seeing data centers that are actually shared GPU-CPU data centers, and they're having to modify that infrastructure. So in the brownfield world, I think the big issues there are just product mix, how much CPU versus GPU. I would assume I don't run a data center, but it would be better if it was one or the other. And that mix is important, but I do run a data center, but it would be better if it was one or the other. And that mix is important.

But I do know many data centers, colo-type data centers that are housing both CPU and GPU applications. And that the GPU requires a completely different power infrastructure. And so what ends up happening is they have to be modified. It just changes the economics and the use of the space dynamics. And two real things driving that. One economics and the use of the space dynamics. And two real things driving that. One is just the intensity of power density. So when you think about cooling, it presents many challenges to a data center for using their space where they use a hot aisle and a cool aisle. With the GPUs, that architecture changes. And the other one is a pulsing power.

So the GPUs have a signature of, instead of operating sort of at a very flat level, we'll call it, they pulse power. And so now your power infrastructure needs to be able to handle that pulsing. This is where additional infrastructure power has to be put in. It also plays into that power availability. So the brownfield, those are two of the major issues. And then on the greenfield side, and maybe thinking more about hyperscalers that are building specific GPU-type data centers,

it's really just coming up with the new architectures and building for GPUs. And that is everything from how to lay out the GPU clusters and then how to get power to that high, dense, pulse-y load. So you're starting to see completely new architectures come into the market. Now, obviously, batteries have been playing a very critical role in data centers since data centers were built. You might want to comment a little bit about for our listeners that don't know how batteries fit in that power delivery and management continuum. If you

could just talk a little bit about that and then talk about is the role of battery technology as we look at these new power requirements for AI data centers. Yeah, sure. I wasn't involved in data centers until about 10 years ago. I had a semiconductor background, but it was interesting to see how they operate. And the key issue with batteries is batteries act as an uninterruptible power source, so a UPS. And the issue there for anyone who works at their home office, for people who went to their home office, realize when the power blips, your computer resets. And the idea is you can't have the internet reset. So the batteries actually act as a continuous monitoring inline source of power. So if the grid even blips shortly, or there is a grid outage for a longer period of time,

the batteries automatically begin discharging real time. So there is no interruption of the server. So that's the role that batteries have played really since data centers started to get built and cloud computing became the main way people operate a data center. So that's the main use. And then more in the last five, maybe 10 years, their batteries have been used more for balancing power within the data center. So just being able to shift load around the data center for different reasons. And then the last sort of historical use has been starting up the diesel generator. So when the batteries that are in the data center are designed to discharge for anywhere

from five to 10 minutes, so quite short, it's just for that emergency power. And if the grid is going to be down longer, the data center will shift to diesel generators. So batteries are used to start those. So when you look at the system, it's a hybrid of grid, battery, generator, and it's all designed around extremely high levels of reliability so that you don't have outages. And then moving forward, I mentioned the pulse power with the GPUs. And one of the uses that's being considered for batteries in a GPU data center is to absorb that load. So you think of the GPU operating at, we'd call it a 100% level and then pulsing up 20, 30, 40% every so often.

You just have the batteries and there is a shock absorber. So the rest of the power infrastructure in the data center doesn't see that pulse. So effectively, the batteries are being considered to, what I say for a power infrastructure, make a GPU data center look more like a CPU data center. So you don't have to change so much in the power infrastructure. And then the last one, which is sort of a little more future, certainly some large companies are working on it. And that is, there's a desire to replace those diesel generators for sustainability purposes and other. And one option there that's being considered and worked on is large battery banks that when you go to a longer downtime, a grid downtime, you could actually switch to batteries for a longer period of time. So those are sort of the five areas that

batteries, and there are some others where maybe things were like power shifting for rate management, things like that. But basically those are the five areas that are either currently being used or considered in the future. That's awesome. Now, I think a lot of folks associate batteries in these types of environments with lead acid or even lithium, but Zinc5 is bringing a new solution to the table. Can you tell me about that? Yeah, sure. So lead acid has been the standard battery for data centers for decades, and still owns a majority market share. But what happened, two things happened simultaneously.

One is that server densities started going up much more rapidly over the last decade. So trying to get more and more power into the same space, more efficiency, more compute, that drive and the advancement of semiconductors and packaging and things have really increased the power per square foot. Lead-acid batteries, very reliable, a good solution. But with that, scaling became bigger and bigger as a percentage of the data center. So basically, it needed double the power. Either you had higher power density of the battery or a much bigger battery, and it was becoming larger and larger. At that time, lithium batteries entered the data center market with very nice energy density and ability to scale a very advanced type battery and started

to take more market share, especially in Greenfield, where these power densities were very high. And just on the heels of lithium, we got our product to the market. And our products claimed to be even higher power density. So we were stepping into that space right at the time it was needed, which was a bit of lucky timing for us, given the number of years it takes to get a battery to the market. So we came to the market and basically with a higher power dense battery. What that means is you need less battery for that very short duration. So it's a power footprint, a smaller battery and cost

because you have way fewer batteries per megawatt. So that's how we got into the market the last few years. And then we looked more like a lead acid battery in that ease of use, a more simple model. Lithium's a little bit more complex. They have a lot more controlled systems and things somewhat related to safety, but also related to their more advanced and their ability to drive longevity and management with their BMS. But we looked more like lead acid and this is a very conservative industry. So it's not easy to change, but with our battery looking

a lot like lead acid in many ways. And then we brought safety and sustainability. So the safety part of it is our battery has no flammable materials. So we do not go into thermal runaway like a lithium battery. So that's a huge advantage. And especially with large batteries that are very close together, that are very densely installed. And then finally, sustainability. And so we've done third-party sustainability studies on our battery. And for those that we've studied, and it's actually a report on our website, we are the most sustainable battery, the lowest greenhouse gas footprint for the other commercial batteries on the market. Certainly new batteries coming that are going to be competitive in that arena, but currently we have the lowest GHG footprint. Now, you've talked about a couple of different use cases

that batteries are being used in the data center. Can you talk a little bit about how the length of time that batteries are powering a data center with power loss and how that works with the generator and how your solutions fit within that perspective? Sure. Well, I mentioned a little bit earlier, but what they call these systems are line interactive, which just means that the same power bus that's powering the servers, the batteries are connected to real time. And so what happens is a lot of times power just dips, surges for very short periods of time, and the batteries will engage in sometimes based on the systems, the diesel generators will not.

In other words, they'll recognize as a shorter term blip. But if the power actually goes out, the grid actually goes down, batteries will suck fully discharged. And I would say it depends on geography, but up to 10 minutes, 15 minutes in some countries. But typically in the US, where we do most of our business, it's two to five minutes. So the diesel generators are called as soon as that power goes down. They start up automatically very quickly. And typically in 30 seconds to say 90 seconds, the generators will be at full power and stable and the load can be shifted to those generators. And so then the batteries go into recharge mode. That's the typical cycle in how data centers are built with UPS systems. And basically, it depends on

country. The United States grid is quite reliable. The more developed nations have reliable grids. Some countries have less reliable, but the batteries are typically used, call it six to 10 times a year entirely, and usually only one complete outage is planned. So when you specify the battery, you're looking for a battery that lasts 10 to 15 years, and it's going to need a back at the data center at least once or twice a year, and then it's going to have to respond to these short return blips as well. So that's the standard model for batteries and data center. What has the response been from the industry, from cabinet providers, from end customers to this technology? And where do you see that trending as we head into the second half of the decade? So at Nickel Zag, the first thing is it's very difficult to get a new battery chemistry to the market.

So the history is littered with many failed battery chemistries. It's difficult because it's electric chemistry. And most of the markets that require batteries, they're looking at it for reliability. So it has to be an extremely reliable system. So it was difficult to get into the data center space. It's very conservative. And as a new, smaller company, it's very risky for those companies to adopt something new. Really what we did is we focused on safety and sustainability, certainly, and then of course economics. And it took us a long time because there's another feature of the market, which is UPS systems are provided by OEM companies. And these are companies like

Verde, Schneider, Eaton, Mitsubishi, to name a few. And so the full system gets provided by them to the customer. And we need to convince them to add another battery to their suite, which is expensive and risky for them. And then the value proposition, most of the value of the battery ends up at the end user. In other words, Vertiv doesn't benefit so much if the battery is smaller, but the data center does. So you're trying to sell the value proposition, the data center, and then convince the OEM to take the chance. So very difficult. Now that it's happened and we've scaled, we've gone above a gigawatt. We actually had a public announcement a few months ago where our installs in outstanding orders are over a gigawatt. Now we're actually headed pretty fast. We're two

gigawatts. Now that there's more confidence in the company's stability and the reliability, people are very excited about it because it just happens to fit this niche of data center, very fast discharge perfectly. We call it our core market and we just fit. And one of the things about batteries is each battery type, each chemistry has a sweet spot. In the case of lithium, their real sweet spot is portability. So it's mobile applications where it has to be small, light. There is no other battery chemistry that does what lithium does. So each battery has its strengths and weaknesses, and ours happens to be this rapid discharge. So a lot of excitement going forward. We've started to expand globally.

We're starting to move into Europe and Middle East and eventually into Asia. So there's a lot of excitement in the data center space. And also when you think AI and GPU-enabled data centers, the power densities can go out more. So our whole roadmap is to basically support that continued increase in power density in a safe, sustainable way. What's next for Zinc5 as you deliver this portfolio to the data center? We're pretty overwhelmed with data centers themselves, very demanding customers. So really, I would say number one is globalization and then just improvement of every aspect of total quality, meaning make sure that our customers recognize us as a world-class provider. We'd like to do more business with the hyperscaler data centers,

those very large companies. And you have to have a certain profile from quality systems and management systems, capital balance sheet. So we really want to strengthen the company within this space and expand geographically. So first thing is data centers, global expansion. And then, as I said, our product roadmap, just continue to look at whether we can play a key role first thing is data centers, global expansion. And then as I said, our product roadmap, just

continue to look at whether we can play a key role in artificial intelligence and particularly this GPU Pulse. We think that nickel-zinc batteries might be a very good solution to that challenge. So we're working on that. And then we've started to move into the industrial markets and to an outside observer, we sell a battery cabinet in data center, we sell a battery cabinet in the industrial space. They look sort of like boxes. But for us, it's delivering the same short duration, high power solution into many new applications. One of those that we do have installed in pilot bases is for EV charging. So with EV charging, one of the challenges, of course, is total power availability, but a bigger one is distribution to the right places, having power where you need it. The simple example I always use is a car dealership, because if you were selling internal combustion engines,

you had a dealership with a showroom and a maintenance shop, and the amount of power needed for that site is actually pretty low. And now you shift electric vehicles, and now you need to charge them all. So you actually need industrial power. So if every car dealership was switching, you can imagine the time lag to get that power. So we started to look at transitional power and also reliability, just like the data center of having EV charging available where it's needed right now. So we have a system for that. We have some of those installed. We're already on the EV charging grid with those systems. Then there's just a bunch of industrial applications coming our way where things like starting up large pieces of equipment that have

been a big problem for, say, an automotive maker. They want to start 20 pieces of equipment simultaneously, but they don't have the power. So using the battery, much like I talked about with the GPU as sort of a buffer, there is many, many applications of that area. And the last one I'll mention is just AI. We think that we could play a key role in that area on power delivery for the GPUs. Thank you so much for sharing all of this, Todd. I think this is fascinating technology. I have loved following Zinc5. Obviously, on the tech arena, we talk about data center efficiency, circularity, and compete sustainability quite a bit. And I think your technology hits the sweet spot of that space so well. I can't wait to see how you guys move forward in this arena. Where can folks find out

more about the technology we talked about today and engage your team? Yeah, so I think the best place is our website. We have all kinds of information and everything from marketing materials to detailed specifications at Zinc5.com. We also have, for those people that want to just learn more about nickel zinc batteries, we have a YouTube. You go to YouTube and Zinc5, you'll see we have videos posted that are just how does nickel zinc chemistry work. And then we also have data center specific materials. So yeah, those are two great places to learn about us.

Awesome. Thank you so much for being on the show today. It's been really great catching up with you. Thank you very much, Allison. I really appreciate your time and the opportunity. Thanks for joining the Tech Arena. Subscribe and engage at our website, thetecharena.net. All content is copyright by the Tech Arena.