56 - How can the marine industry be electrified and be emission free?

This week Chris and Johan are joined by Magnus Eriksson, CEO of Echandia Marine, a Swedish company with a mission to electrify the marine industry. The main topics of discussion are battery usage in the marine industry, safety and charging of batteries. What are the regulatory issues? What are the infrastructure requirements at ports? How does hydrogen play a role in the marine fuel industry? Listen in to get answers to these questions and to find out the future of the marine industry. 

Chapters

• 5:12 Introduction
• 12:52 Battery usage in marine industry
• 15:52 Safety and charging of batteries
• 32:31 Regulatory issues
• 38:08 Infrastructure requirements at ports
• 41:37 Future of marine fuels

Transcript

Broadcasting from the commodity capital of the world, Zurich, Switzerland, this is ‘Insiders Guide to Energy’. 

This edition to Insiders Guide to Energy is brought to you by Fidectus. Go to www.fidectus.com for more information.

 | Timestamp | Speaker | Transcript

| 06:15.40 | chrissass | Welcome to insider's guide energy I'm your host chris sass and with me as co-host Johann Oberg
| 06:17.16 | Magnus Eriksson | All right.
| 06:34.47 | Johan | Another great week Chris Good good to be on really interesting to see all the interests from our miniseries. Ah, it's good to see the the feedback we're getting the good questions. The the idea is the sharing Of course.
| 06:35.00 | chrissass | Johann how's it going this week
| 06:52.13 | Johan | But 1 thing just struck me after Christmas when we came back starting doing the show that we're actually hitting 50 we never had a celebration around our fiftieth episode. So do you know what? I did and I think you shared ah some of them as well is I put up my personal the best of so for you guys I haven't seen it yet. Get into the Linkedin profiles and start looking at my countdowns of of my favorites of the show. But Chris it wasn't easy. We have so many good guests on this show now.
| 07:19.00 | chrissass | So yeah, at this point we are getting a lot of content. We've got had a number of guests the the exclusive club that our guests join is getting bigger and bigger. But it's still fairly exclusive I think we're still under a hundred are getting close to a hundred when you put all the shows together. Um. But yeah I did see your post I've got to go through and look through your list later and and and really just see if it aligns to my favorite shows so far. Um, and it'll be fun for audience to do the same. So if you see Johann's comment
| 07:43.70 | Johan | Ah, for sure.
| 07:47.93 | chrissass | And you think differently you like it give him a thumbs up. You're not so sure about it. Don't be afraid to let Johann know because I certainly will.
| 07:56.68 | Johan | Honesty is our best friend? yeah.
| 07:56.84 | chrissass | So let's switch gears and talk about this week so there was a lot with the podcast like you said the mini seriesies has been out by the time this episode's out. We've had a couple weeks in the mini seriesies out so quite a bit of interest there. Um, how about the energy industry any any news there or anything interesting that you want to talk about this week
| 08:13.75 | Johan | I think in general the the big talk of the town is is outside of the energy industry now and that's the energy prizes. Of course. There's no doubt about it all the families. You know all my friends back in in stockwam Sweden now putting up a ah receipt on their energy bill saying what the hell is going on. You know that's my that's my vacation money gone etc. So obviously there's a big talk about the energy prices.
| 08:39.32 | chrissass | So prices yeah that that that's been something. We've been predicting. We've been talking about going into the window. So I don't think it's a surprise but I don't think it makes it any easier. That's my take.
| 08:48.29 | Johan | Now I think it's more comes down to the consumer business to the consumers now which we might not have seen in the same way as we discussed on this show. But at least talk of the town.
| 08:55.62 | chrissass | Yeah I'd have to I have to agree with that. So so you're kind of a downer at the moment. Um I don't want to talk about what we're gonna talk about this week because that is not a downer. It's pretty exciting what we've done in the show for those that have listened to many of the episodes and I'm gonna bet be some of those are in Johann's playlist we've talked about battery. We've talked about storage. We've talked about ev vehicles. But we really haven't spent much time other than maybe on hydrogen talking about marine and marine applications as well. So I'm I'm hoping we're gonna get a good good feel for that and where that's going in this episode because to me if I look at it not just from an energy perspective. But. From a global warming and a C O 2 emissions thing marine can be a problem marine's problematic.
| 09:40.71 | Johan | No I agree and I think for I'll be really interested to hear all so what are the the differences between you and we we talked a lot about evs This is ah what I understand a totally different ball ballpark. This is a different game. We're talking. You know ships We talk Marine this is it's going to be really interesting to see and also as always not being the entrepreneur on the show. Iss Always interesting to see how you guys as entrepreneurs are entering these large industries and working with companies like ours. There are the big utilities. That's always fascinating mean what the drivers are so a lot of things to think about and and to listen to.
| 10:23.64 | chrissass | Well before I introduce our guests I just have to call you out when you work for a swiss company and can call yourself a big utility. Um I have to call you out on that because I mean yes, you're big and there are many countries but big utility.
| 10:37.94 | Johan | Um, big on hydro.
| 10:41.66 | chrissass | All right? So without further ado this week we brought our guests in we have Magnus Erickson Ceo and founder of how do you say your name and and Chan numberine sorry um, apologize for that. Um.
| 10:43.29 | Johan | Ah.
| 10:54.19 | Magnus Eriksson | Ahand amarine.
| 11:00.70 | chrissass | And want to welcome you magnus to the program. Um, it makes sense for you to maybe share a little background at who you are so we we gave a little history of what we think we're gonna talk about but as always Johan and I have no clue what our guest is gonna say so let's start by your personal background here. How'd you get into what you do and.
| 11:18.61 | Magnus Eriksson | Yeah, sure. Yeah, ah first of all, thank you for inviting me to the show I'm glad to be here today. It's a new experience for me being part of this type of podcast production and I'm anus Ericson I'm based in Sweden native suite and.
| 11:18.85 | chrissass | Little bit more about what you do professionally.
| 11:38.43 | Magnus Eriksson | My professional background is within naval architecture. So I've been working for about 20 years developing swedish navy systems and primarily swedish submarines. So in various positions I've been working with developing energy systems, electric propulsion systems and. Ah, you know swedish summary in flotilla has been going for over 100 years and they've been operating on electric propuluchion systems ever since the beginning so this is like I'm talking about hi.
| 12:06.12 | chrissass | Well, that's what came to mind when when we start talking electric Marine I Think of you know the old submarines that ran electric Underwater you know, granted I believe they ran diesel when they came up to the surface but they were electric boats at one time I believe.
| 12:14.41 | Magnus Eriksson | Yeah.
| 12:19.95 | Magnus Eriksson | Yeah, yes, absolutely and and also in terms of the hybridization batteries and diesels and all these stuff has ah has always been part of the energy mix on these type of vessels. So. I started off my career there and doing a lot of r and d work and systems, developments, EtcEEtc and was rewarded with a few patents in 2005 or 6 or something like that regarding electric propulsion systems and primarily more directed towards torpedo propulsion systems and how I sort of quit my day job then and then started off doing some electric. Yeah pleasurebo designs based on these type of innovations that I was then working with. But ah, it was too early only the market that I quickly realized there. Ah there is not a viable market for electric pleasure boats at that time fifteen years ago
| 13:14.60 | chrissass | but but I have to tell you I'm a sailor we have a volt drive on on a boat. It's about thirty four feet line and it was wild the first year of using that boat because you would get on to leave the dock and it was absolutely quiet and you had no feedback loop of the the vibration of the boat. You.
| 13:30.33 | Magnus Eriksson | That ah.
| 13:33.40 | chrissass | You could get the propeller to cavitate because you you put the throttle up and all of a sudden You're're you're cavitating your propeller. Um I found it great for club sailing. So when we just around out around the Harbor sailing and stuff where it was challenging still early in its development is if I had to do a delivery on a no wind or a long day of.
| 13:36.21 | Magnus Eriksson | The.
| 13:51.00 | Magnus Eriksson | Yeah.
| 13:52.43 | chrissass | Motoring um, didn't have the battery capacity to go for 8 hours or 10 hours or something like that so easier to put some Jerry cans of fuel on a boat and and make the whole journey than to have a little Honda generator on the deck powering the.
| 14:01.94 | Magnus Eriksson | Um, yeah.
| 14:07.95 | chrissass | Boat at that time and that's only been the last four years right it's not that old a technology.
| 14:10.27 | Magnus Eriksson | No, no, no are there are so many initiatives going on now in the pleasure boat in this industry but we as a business moved into the commercial space in 2014 when we launched world's first supercharged electric ferry operating in Stockholm. And it's funny when you say cavitating propellers because the skipper we ah we recruited a skipper and it was obviously quite familiar with operating dieselri ferries and he knew like when he was driving at five knots he knew that he was driving five knots because of vibration his back. Because the end he was making so so many vibration vibrations and when we ah converted this vessel into electric propulsion. He was completely lost when he was entering into the harbor and going into the key. He didn't know how fast he was driving was everything was silent so he has started to look at the Gps and the all the. That stuff so quite interesting experience. All of a sudden you have a completely different sense when operating these type of vessels and and gradually moving on from there. We built a number of really cool projects. Another cool project is the fastest. Battery ferry in the world. A thirdnot passenger ferry called Bebe Green we built that one two years later in 2016 and so we've been taking step by step and it's not until quite recently I feel that there's like a really strong momentum in the market. Ah. Also it's not an idealistic market. It's it's more like driven by political trends now and it's more of a cohesive trend and also looking into the financial markets you need to be ah, have a sustainability profile for to track funding. So it's more of a. Very cohesive moment of ongoing right now I feel strong strong winds and and I would say this development is quite recent maybe in the last eighteen months or something and an increasing. So so. Um, or my private or personal background I'm a bit of an entrepreneurial spirit. So I have hard to say no to you interesting projects and I think that is the reason why I've been achieving a number of these type of projects. It's just because I've without any prior experience or proper knowledge has been. Assuming that we can deal with this and we will make it happen so that's how we got this far anyway and now we're moving forward. So and as a business we're quite a small business based in stockhol and also a new entity in Canada. So.
| 16:55.73 | Magnus Eriksson | Battery business is based in Stockholm and our fuel cell development arm is based in Eastern Canada which was set up in 2021 so currently employing about 34 people here and in Canada and growing by the month so primarily now. Within the commercial organization with marketing and sales people where we need to increase our capability. So.
| 17:20.54 | Johan | So it's out of interest Magnus. You mentioned Sweden and Canada obviously being sweet I know a little bit about the the swish marker especially stockcomm and the archipelago. What and that you have development centers in different countries I can understand so how how how did it end up with.
| 17:20.73 | chrissass | Great.
| 17:39.30 | Johan | Sweden and Canada they're not really the normal so to speak or is there is there a natural connection.
| 17:42.40 | Magnus Eriksson | Um, now. Yes, it is absolutely the canadian connection is is ah it a bit of history here there where I have been working with some partners over there for a few years doing desire work for Marine Fuel Cell Systems Canada are quite well represented in terms of fuel cell competence because of the various businesses related to fuel cell developments. There. So these guys I'm working with here. We were sent up this joint development entity have a broad experience from canadian fuel so companies. Basically so that's the reason why we're based in Canada. And Sweden yeah I don't know I'm swede. That's probably the the simple answer to that.
| 18:26.11 | Johan | But on us on ah going back a little bit to what you mentioned in terms of the electrification of the marine industry in general and of course this is a massive industry and we can break it down to what you mentioned to ferries to to deep sea and all the rest. And you said that in the last eighteen months you're starting to see this. For example, we have pleasure boats with ex getting a lot of traction is least in the media from Sweden as well. But where where do you see the difference because and we have evs everywhere. It's. On the streets now there's no doubt about it a few years ago there was maybe some discussions now is over how how do you see comparison or differences with with kind of the the the marine versus the ev.
| 19:07.26 | Magnus Eriksson | Ah, well well looking looking at the commercial application. First of all the requirements as such the technical requirements on the on the application is vastly different. It's much more demanding applications for maritime because of the what we. Defined as heavy duty type applications with nearly twenty four hours of operation with numerous charging events for a battery system in a day and very long warranty times that are required to typically roughly 10 years full full value warranty times. In these type of heavy duty applications so to compare with an ev system it would last maybe a year or 2 in this type of application before you would have to replace the battery system. But in our case, ah the type of battery system. We're developing and supplying to the market is the most. Reliable and and durable battery systems available in the market and ah of course ah the initial upfront investment for our type of battery systems is slightly higher but the total cost of ownership is considerably lower because our. Battery system lasts for 10 years while the competitor needs to replace their batteries several times during this lifespan or upscaler battery system. So they lose competitive competitive edge. So.
| 20:33.46 | chrissass | So is is is your technology then and so from what you've stood to the audience so far as you've got a fuel cell development group and you have a battery element to this. You've got a design element obviously based on your history as the founder you you come from a design element. So is part of your company's core competence battery technology then.
| 20:54.79 | Magnus Eriksson | I would say electrical integration or system integration in general and we started off building complete electric drive lines charging stations like complete electric vessels either. But ah. Um, 2018 and onwards we're only focusing on supplying energy systems alone. So That's the core focus or the core competence from now On. So The web abroad maritime experience in the business as such that focuses on batteries and fuel cell systems now.
| 21:29.10 | chrissass | So so what are some of the differences that I know in our precall when we spoke kind of preparing for this. We talked a little bit about the difference between maybe the batteries in my Tesla and the batteries and and 1 of your vessels. Um, maybe talk about the demand the requirement. What.
| 21:40.80 | Magnus Eriksson | Yeah, the.
| 21:45.64 | chrissass | But makes it special why why does you know everything marine cost me two x because it says marine on it is there different engineering things that are taking place or what's happening and you gave 1 example already I think by the life expectancy. But what else.
| 21:54.41 | Magnus Eriksson | Yeah that's one top what that's 1 topic and the other major difference is the safety aspects and what's related to to type approvals to be able to to offer your solutions in the marine space. You need to have. What's called a type approval cert certificate so that you have um classification site approving your systems that they are deemed to be safe to be used on board ship and that is I would say in terms of battery development the most mature and and well developed. Framework work for technical requirements on lithium batteries for electric propulsion. So that's driving complexity to some extent and also costs. But I would say that the the biggest driver is is the the requirement on the application as such. We are supplying. What's called lithium titannet oxide batteries where we're using titanium in the battery. Ah that gives its certain characteristics in per in terms of power density and safety and and durability and long term reliability. So ah. We're the only business in the world who has this type of this type of type approval for lto batteries and and we're supplying the safest lithium battery available in the marketplace and that's 1 interesting, really interesting topic because that's where we feel that autumn the automotive industry is not as. Wellde developloed in terms of regulation. There are so many battery related related incidents in in the automotive industry and land-based ess applications just looking at gm and him I and other examples where you have massive recalled programs for safety. Ah, related limitations I would say in in existing battery solutions. So for marine applications. It's a completely different matter when out at Sea. It's a complete disaster if you have a fire incident on board and if you can't control that incident so you can't. Ah, escape at sea you need to be able to control it. It's hard to evacuate passengers and crew while if you're driving electric vehicle. You can just drive side and stop and just walk away from there but you can't do that at Sea. So that's a big difference. Um, and um, yeah, power density. Yes, when you're operating a electric vehicle if you're operating an electric car today as a private person you typically maybe recharge a couple of times a week
| 24:43.28 | Magnus Eriksson | In our applications. Maybe you do that 20 times a day and at full power Maximum. What's called C rates so high power recharging events. Um and a tremendously higher amount of such charging events per day So that's completely different matter in terms of ah. What ah requirements that put on the battery system. So yeah, that and.
| 25:07.90 | chrissass | So So you bring up and so you bring up some points. So So safety. Um, you've you've covered quite a quite a bunch of ground there. But you you just said something about charging and then the rate of charging. So. Are there these supercharger stations along the shore that you're pulling into or how are these vessels What kind of infrastructures there and required to quickly charge a ferry that needs to turn around and go back out and go on another journey.
| 25:36.29 | Magnus Eriksson | Yeah, depending on what type of vessel. It is historically the development started off with smaller passenger fairies. So in a city like context typically commuter fireies and things like that and now moving on. Road fires road row road pax fire that operate typically and ah some kind of a fixed schedule between a known ports then it's pretty easy to dimension your battery system and see where where you need to have your charging stations. We've supplied the number of projects one is for the the city of Copenhagen. Supplied the battery systems for 7 new battery feries, commuter feries and in that type of operation. They have 3 charting stations distributed within the city of coppaine again and they operate fully automatically, so the the ship enters the dock and it it automatically. Ah, hooks up to the boat and connects automatically the charger and then it recarts in 5 minutes and then it takes off again and operates like that and recharges every hour and operates 16 hours a day so it's and then in that case 7 year full-time war. Value warranty and 12 years design life we have for our battery system and that type of operation. Um, yeah, so yeah, you have charting stations very much like what you have for electric buses but you have different. Means to connect to the vesa because the boat can move so it's a completely different dynamic situation when when recharging so it's a bit more complicated I would say.
| 27:20.83 | Johan | In terms of technology and and might be a stupid question not be in the engineer on on the coal but in terms of the battery density and and the volumes that you said we had discussions on the show before where we and we had the kind of the the pros and the cons with batteries versus Hydrogen. In terms of trucks but would would you say that your technology would be suitable also for for for heavy trucks or at least long distance trucks or is it is it more specifically designed than for the marine.
| 27:40.96 | Magnus Eriksson | Yeah m.
| 27:54.19 | Magnus Eriksson | Now. Ah for heavy duty to type trucks. Absolutely especially our type of high power batteries combined with fuel cellss makes absolute sense because when combining batteries and fuels does anyone you utilize the batteries a power source. Peak powers high power output not so much for the energy carrying capacity. That's where the fuel set and hydrogen comes into place. So yeah, absolutely, although we're not focusing on track applications at the moment. It could be a future development and comparing batteries at batteries and. You need to lto batteries have had a poor reputation historically because of low energy density ah per Kilowatt hour but this is important to know that when comparing you need to compare compare apples and apples and not apples with pears. Because what's interesting is the usable amount of energy you have on board. So typically what we see in our projects is that we we are offering a much smaller battery system in in terms of installed ah amount of Kilowatt hours um while the competition must install a much larger battery system and utilize a much smaller part of that battery system to be able to to meet the long-term requirements. So ah, even if the competitive solution may be cheaper per. Kilowatt hour to buy you need to buy more kilowatt hours to make the same job. So that's a huge hugely important point actually so in most cases we have a lower tco and a smaller footprint with our battery installations even though on specificational level. Our battery system is more expensive. Ah, typically way more.
| 29:44.89 | chrissass | So I was gonna ask about weights you went right? to what was coming to my Mind. So So you know 2 things come on with weight is is it additional ballast and are you having much more energy to move your vessels because you're using electric batteries or is that just part of the design of a modern ship and it. It is just part of it help me understand how that works.
| 30:04.66 | Magnus Eriksson | Now depending on the size of ship I would say in most cases we we're limited in volume so we built the first the world's first full-s sized electric tug boatat for instance in where we've installed nearly three megawatt hours of batteries in that case. You're basically replacing bunker volume. So many many many tons of fuel oil with battery weight instead. So that type of application is not weight sensitive. It's rather volume sensitive so we need to make a lot of efforts in trying to. Squeeze down the volumetric footprint for the installation. Not wait, but there are so many other applications where you are weight sensitive typically highpe ferries carbon fiber vessels that where were all that matters is weight and now in Sweden in ah, another place in the world. It's. Trend moving over to foil boats to further improve the energy consumption for the vessel as such and they are even more weight sensitive. So. That's a niche application where weight is more important than maybe a long-term durability in the battery system. So those type of operators may have to replace their battery system and go and opt for a cheaper and more lightweight battery solution and then have to replace the batteries every second year or something.
| 31:25.20 | chrissass | Okay, so so so I understand the weight and and I understand the volume things so I assume 1 of the battery technology evolution is reduction is size is what what you're hoping is one of your technology advances over the next few years
| 31:39.56 | Magnus Eriksson | Yeah, um, we have a new development coming out in the market. We're currently doing a lot of cell qualification tests on a new complete a new type of cell chemistry. Ah which theoretically has ah an improvement of 300% more energy carrying capac. The energy density improves with 300% in the first generation we're launching we're using the same cell can the same geometry of the cell itself. So on the same weight and volume. We're improving with nearly forty percent the energy storage capacity. So.
| 32:14.25 | chrissass | Now is thermal runaway a problem in Marine battery type of things is that a a concern or issue you talked about safety before what? what's different here. Why why am I not having hot batteries sitting in that tugboat. That's just glowing red if I look through infrared.
| 32:21.25 | Magnus Eriksson | Yeah, absolutely yeah, yeah, now that's one of the most important factors so related to these type of classification tests I I mentioned previously. Have to do a lot of repetitive thermal runaway tests to prove that if you induce a thermal runaway in 1 cell that shall not propagate to neighboring sets in your battery module and if it does that a second layer of safety or the the absolute minimum requirement is that one specific battery module. May go into thermal runaway but it can not propagate to the next battery module and we have proven during these tests that our type of lto battery cells. Do not propagate between cells. So. It's the highest level of safety in that sense. Without any active measures at all. So and there there are a lot of safety related details about these lto batches that are quite interesting that I can probably go on for another couple of hours but ah we can just stop with say that this is.
| 33:35.31 | chrissass | Now that that I think that that answers my question I think I'm gonna ask 1 more and yo and you can ask question I'm sorry I just passionate you got me excited here. So i.
| 33:35.48 | Magnus Eriksson | By far the safest solution available. Um.
| 33:47.44 | chrissass | Also have to assume that the shipyards would have to become a virtual partner of yours somehow to make this all work because I don't think they're used to building these kind of ships so tell us about what happens there. How's that working for you.
| 33:54.20 | Magnus Eriksson | No yeah, no, it's previously a lot of our products has been sort of the first project with the customer so where we have to sort of educate and and and sort of coach. Our customers. Make wise decisions. 1 example is a huge establishment in in India where we're part of establishing the biggest fleet in the world of electric ships where nearly one hundred boats are now being built in the sit of Kochi in Kerala in India and where they're hooking up the waterways with the metro system. So electric ships will operate in tight integration with the metro systems. So it's a really cool infrastructure project. But that's an example where ah the shipyard and the the end user the the city to have no previous experience ah from this at all. So it. Taking some time to sort of get everyone on board and understand what so what are the most important factors here and 1 interesting observation is that this is the first public tender where they got advice from consult and companies and everything so in the specification for this project. They specified. Specifically that lto batteries were the only allowable battery chemistry to be used because of the requirements as such on the applications. It's a new interesting trend. So and then the first one to my knowledge anyway, where this type of titanium oxide batteries were the only allowable choice. Because of safety and and reliability. Um, and yeah, ah you do run across new experiences when integrating electric new electric type switched gears on board. You enter into a lot of. New phenomenon on board related to elected dynamics and what's called Emi or enc related stuff that is new things to tackle so often we have to sort of work in close collaboration with the shipyard or the system integrated to resolve issues like that. But yeah.
| 36:07.67 | Johan | But we're related to to the shipyards. It's also the harbors. So the the because the infrastructure needs to be done I know from an ev point of view that was one of the biggest still is in many ways. The biggest hurdle in terms so of of procuring an Ev channel. You know how do I How do I charge my my my cart.
| 36:07.79 | Magnus Eriksson | So far so good.
| 36:27.56 | Johan | I Guess for boats even bigger. You know you can you can produce the best battery you can produce the best electric boat but unless the whole ecosystem is there to support it. It kind of collapses.
| 36:36.19 | Magnus Eriksson | Yeah, well Norway as ah as a lead example in this type of transformation to typically how it's done. There is when they have a new tender coming out for operators to be on. Say that? whatever it may be of slow going fires or high speed fires. Typically how they've done it anyway is that the operator who's putting in the bid has also to take responsibility for any. Shore-based infrastructure establishments such as sharding stations or hydrogen refilling stations so that has to be part of the bid. Not just only buying or building new vessels but also establishing the necessary infrastructure and that's a bit of responsibility to put on the operator.
| 37:25.30 | Johan | Um, yeah.
| 37:27.21 | Magnus Eriksson | And in other places the world is different where sort of you specify. These are the boundary conditions. Basically we will put chart stations here and there you just have to bid on the on the operation and build vessels to meet the timetable. Basically so it differs from various regions I would say and we're working with swedish buttonfa. Sort of remedy this catch 22 situation that may appear so they can take the main responsibility for establishing charting stations and hygiene refilling stations and also ah targeting existing fleet donors. They also need to address this transformation. It's not just new build. We have I think 30000 or more vessels sailing Europe alone and at least a part of that fleet or is so new that you need to actually consider to actually convert those boats into electric propulsion.
| 38:22.98 | Johan | But that leads us to you. You mentioned a little bit the differences between between the countries and Norway went one way other countries went and another way for the infrastructure alone but is this.
| 38:23.86 | Magnus Eriksson | So um.
| 38:38.69 | Johan | I See this as a little bit of a challenge in transformation industries in general because you have regulatory differences. So If you're launching or rolling out a battery solution or a vessel solution or infrastructure solution. It's very difficult to find that the the return on the investment in one local Market. So. So How do you approach this when if if all the countries are having different rules and different appliances to make this happen.
| 39:02.62 | Magnus Eriksson | Yeah, well Eu is taking one angle to this not to specify technical solutions but rather putting other initiatives in place to stimulate the industry itself to to seek out the best solution. Which is the most technically and commercially viable solutions. Ah so they're introducing or they proposed a new tax system within this fit for 55 framework this climate law climate law proposal. They're proposing to introduce. Marine so marine transportation into a tax credit system for the first time and which means that ah all ships operating between eu ports or international ships coming into an Euport has to declare. The energy consumption on board. Whether you're using fossil fuels or whatever fuel you're using and you will be taxed accordingly. Ah, and in addition to that they will also tax the energy intensity onboard so try to stimulate. Reduce your energy consumption on boards you will actually be taxed if you're using a lot of energy import regardless of what type of energy. So that's another way to try to stimulate a more progressive development and then um. Fossil fuels in general will be taxed when purchasing it. Also in addition to this It's basically 3 3 parts there and then in parallelil you use launching massive programs for ah.
| 40:36.35 | Johan | Um, yeah.
| 40:53.72 | Magnus Eriksson | Primarily I would say related to hydrogen production and distribution and the logistic systems for hydrogen and and where port facilities is one import that's area of course so there are a lot of parallel activities I would say to meet the end. Gold. Um, so you yeah us is more of trying to create a so a foundation with stimulation packages and incentives that will increase over time starting into I think 2023 and then just the tax. Pressure and incentives will just increase as technology matures so I would say that this this application when ships enter into port is just the first step. Ah, when lying in port you need to do that under 0 emission. But soon. There will be requirements when actually when driving your ship into port you have to do that under Syria mission and I see eventually when entering into eu waters that has to be done in sereal under sea emission operations. So the requirements will just increase and increase over time.
| 42:04.90 | Johan | So So so out of Curiosity. What are we talking about I know this is a hypothetical question but I got gave my head around it. What are we talking about in times because you're you're building a vessel. This is not ah something you do on a daily basis. You. It's It's a long process. You utilize this vessel for a long period of time So when when Eu is putting these demands saying that yes in port you need to be C or mission free in in and out you need to be what are they talking giving timelines because I would assume it's a big.
| 42:39.70 | Magnus Eriksson | Yeah, of course it's ah it's a it's a soft introduction of these tax systems. Ah but idea is to start introducing it in all in 2023 and I think if I remember correctly twenty was it not 20%
| 42:39.13 | Johan | Switch in order to make this happen.
| 42:58.95 | Magnus Eriksson | Um, of the um, let me see if I get this right? Um, ah they will start taxing 20% of the verified emissions in 2023 going up to 100% three years later so it's a.
| 43:16.73 | Johan | Um, so fairly quick. Ah, ah.
| 43:18.70 | Magnus Eriksson | Rather quick. Yeah fairly quick introduction of that that taxation on emissions and yeah, so that's typically a timef frameme and when talking about shipbuilding most new build ships today at least if you're have a european ah. Business they have to be future proof in terms of being to to be able to be at least upgraded over lifetime to meet the end state of at least cutting your emissions with 50% but the ultimate goal is to cut cut it with hundred percent so the the fit.
| 43:39.76 | Johan | Okay.
| 43:55.16 | chrissass | So.
| 43:57.75 | Magnus Eriksson | The fit for 55 is 55% reduction by 2030
| 44:01.48 | chrissass | So I guess what comes to mind with me is if we look at the electrification of everything right? Are you have cars electrifying you have boats electrifying. What are the economies of scale. How many boats you're coming out of European ports in and out or American ports wherever this is going to take place.
| 44:18.49 | Magnus Eriksson | Now.
| 44:20.50 | chrissass | And is the capacity from many of our audience members going to be there or are there projects that are tied to this are you working with with ah renewable developers or or what to do because if you suddenly take thousands of ships and they're very high demand and very. Mean very power intense where is all that going to come from.
| 44:43.93 | Magnus Eriksson | Well for the foreseeable future looking into the supplying patteries into this market. That's not going to be ah any shortage trust of supplies. Yeah, the.
| 44:50.80 | chrissass | But you have to charge those batteries right? You you have to have some sort of some sort of electricity coming in some sort of power source is going to charge those batteries because it's probably not the most efficient use to get it to a battery you're going to lose some.
| 44:57.33 | Magnus Eriksson | Um, you know.
| 45:02.87 | Magnus Eriksson | No, that.
| 45:06.27 | chrissass | Some energy a along way and and I'm not criticizing I'm just looking at it as and we talk to all kinds of projects and everything's getting electrified but this seems like a big wallet ball at once.
| 45:12.41 | Magnus Eriksson | Um, the bottleneck the at least in Northern Europe the bottleneck is not the energy the total energy consumption of the fore costed energy consumption as such as the power limitations in the various distribution grids. You can't supply. Sufficient amount of ampers in the cables basically to feed the peak power. It's required so it's going to be completely different mindset here with distributed localized batteries and fuel cell system to offload the main distribution grids because that's going to be the the biggest. Need to resolve the the whole infrastructure challenges I would say so that's going to be an interesting part for our business actually looking into port facilities to install batteries and fuel cellss to to offload the grid support these type of peak. Demands that will be asked to increase and increase and increase.
| 46:10.75 | chrissass | So so what I'm hearing you say if I understood and I'm not the engineer much like my my colleague yo on here is that there there will be almost like a capacitor or something you're gonna put patteries of things at the port. And so you know for that 5 minutes every hour in That example, you gave earlier in the podcast that comes in that may be a peak peak moment but during the rest of the time that battery capacity at the the port would charge back up for that next hour more or less a pretty simplified example and then when you come you pick out and you'll be okay and and so that's part of a project perhaps in the future. Where where you upgrade the port handle it because the grid infrastructure isn't in place to handle the the capacity required.
| 46:50.32 | Magnus Eriksson | And it's not only capacity issue. It's also a cost implication with having high amper connections high power connections from the grid currently utility companies charge a lot for and and and for a boat we can talk about. Maybe. And number of Megawatts of power connection to recharge but a veres up so it quickly sums up to many many many a megawatts of power required in a port facility. Ah so it's a business case perspective on this as well with where it makes sense. It's a lot cheaper to. Paralyzed charting station with a low power connection from the grid supported with a localized battery system. So that's another interesting development going forward from here.
| 47:38.41 | chrissass | So what does this do to the cost of operation and cost of ownership of vessel and and the lifetime of vessel so you obviously change your fuel costs probably change your maintenance costs as well. How how does this compare to a you know if. Buy a conventional vessel today or buy an electric vessel today and put them next to each other What's what's the ah roi on the 2.
| 47:59.28 | Magnus Eriksson | Ah, when I get that question I say it's an irrelevant question actually but because because it's it's in I understand we're asking it but historically speaking that was a common question where I had to argue and what's.
| 48:03.72 | chrissass | Okay.
| 48:15.67 | Magnus Eriksson | What's the return on investment. How many years down the operation does this make sense but looking into what is the the side outcome of this transformation. It's not a matter of operating on dce it's not going to be an option and it will be taxed so heavily. In the future that it's not going to be a business case operating on Fossil Fs so it's an irrelevant question for me the question for me is what is the best 0 emission solution compared to competition that is what I'm focusing on and yeah, currently the challenge right now is on the hydrogen side. With energy cost being rather high in this early on market for hydrogen so that is a substantial challenge I would say when looking into various alternative fuel solution hydrogen is still as an energy. Pretty expensive.
| 49:09.51 | chrissass | Okay, so so when I hear you say that I hear you say it's expensive, but it's worth it because you don't have the choice is kind of the the takeaway that I heard this is otherwise you would say Well yeah, it's comparable, but that's not the right argument you're making So so so I think it's not.
| 49:18.60 | Magnus Eriksson | Yeah, yeah.
| 49:28.12 | chrissass | Inexpensive and then you're saying is of the choices. It's the most cost effective is that is that the right response to it. You just told me.
| 49:30.15 | Magnus Eriksson | Um, it's well my advice is to as long as the battery technology is sufficiently capable. It's the most energy efficient and most cost efficient operation but in many application.
| 49:41.52 | chrissass | So so.
| 49:49.85 | Magnus Eriksson | Applications the energy densities 2 4 basically so you need to move into something else and that's where the fuel cells and hydrogen come into place and in in the product discussions we have today. Ah, 0 emission is is is required so you don't have so much to choose between and then. It comes on the on the total cost there when the operator sends it sends in its is tender of course but there are short term other solutions of course that it may be cheaper than hydrogen. But it's not an ultimate solution biofuel related stuff e cetera e etc. But it's it's still.
| 50:26.24 | chrissass | But you'd see those as incremental or more of a band-aid is what you're saying okay that and and we're not in the market to buy ships I was just curious so you know I'm not trying to do a critical evaluation I think it'd be fun to trip switch gears into more johanns.
| 50:28.41 | Magnus Eriksson | Means? Yeah, yeah, it's not at the end of this century that that's not gonna be on the market. That's my fun combination. Ah.
| 50:45.84 | chrissass | Normal area of questioning. It's so you're an entrepreneur you've built this company you you claim you're small when I've seen some of your accomplishments then I think you've done some pretty amazing things for a small organization. Um, tell us a bit about the business. So yes, let's talk about the entrepreneurial side of this.
| 51:00.85 | Magnus Eriksson | Yeah, ah well I've nearly suffocated with this business over the years because we've been too early on in the market. So if I've one of my biggest takeaway experiences that you need to have stamina. When jumping into something like this, especially if you're a pioneer. Absolutely you need to have stamina and be able to sustain and and actually it's easy to to overestimate the readiness in the market. It always takes longer before it matures than you expect or hope for. So prepare for that. But I feel right now we have a very strong momentum. We have great fundamental qualities in our business. We're supplying the best products available. We have a unique position. We have the opportunity to become a world leader. So the word leading supplier for 0 emission solutions. For sure. So. It's a very exciting time. We're in. We're preparing the business to go on a stocking change within the next twelve months to make sure we have available funding to to grow the business over time. So.
| 52:16.13 | chrissass | So what do you need to grow. Ah so so you said you have at least a hundred ferries being built some contracts. You've talked about you've got things going on. You've got a r and d team it sounded like in maybe p e or somewhere over and on on the canadian shore there. Um.
| 52:17.76 | Magnus Eriksson | Ah, lot of things going.
| 52:27.49 | Magnus Eriksson | Yeah, yeah.
| 52:33.99 | chrissass | So if if company goes public. There's usually something to do to to grow that you've got some massive plants you need manufacturing capability. You need engineering capability. What what is it? you need.
| 52:40.98 | Magnus Eriksson | Yeah, we I would say in 3 domains. We need to continuously invest in in our product portfolio or in the investments primarily the biggest cost driver is on on the fuel cell side but also on the battery side. So stay ahead of the competition. We need to to continue to be agile and customer focusedcused and ah continuously fine tunene our product offerings that requires funds ah production capability wise so we're looking into. Ah. Establishing ah sell production in in europe and investing in production facilities to expand and also looking at possibly expanding outside marine so we need resources for that and then we're operating on ah in a global market. So we need marketing and sales resources in an organization to cover the global need where typically today ah primarily working through big global customers who have the global outreach and a global presence but there are many many regional customers as well that we do not reach. Through our big global accounts so we need to have a regional presence as well and this requires resources and we cannot either exclude the possibility that we we need to expand by mergers and acquisitions either that may need further resources. Met.
| 54:13.45 | chrissass | So is this a race or are there competitors nipping at your heels as well. Are there quite a few that see the same global opportunity. Are you still on the leading edge.
| 54:23.59 | Magnus Eriksson | Well in the Marine space. They're not that many suppliers actually I would say less than 10 really qualified battery suppliers and very few on the fuel cell sides so far so that gives you an idea compared on the land-based side or automotive Side. You have so many different. Possible battery vendors out there. But it's a limited ah supply base in that sense for maritime and there are some hurdles you need to get into the supply chain and and once you're in you need to have a long-term presence. To be able to be good. An approved supplier in this maritime business so you need to have the to prove your your credibility and that you're that you're in in it for the long run for sure. So yeah.
| 55:16.82 | chrissass | So is it also analogous to the Ev vehicles for having autonomous driving is is that a future in Naval transport in shipping.
| 55:27.56 | Magnus Eriksson | Yeah, Absolutely yeah I know 2 projects were out or 3 were autonomous operation is is required actually so we're not developing solutions that we are supplying energy systems for those type of ships. But yeah, that's a trend for sure and but. Particular for for smaller vessels ah crew cost is is a huge part of the total operational expenditure. So There's a business case driver for moving into autonomous operations. But we're not there yet. It will take some time before it's fully mature.
| 56:04.60 | Johan | So so out of curiosity I know where we're running up a little bit towards timema here but out of curiosity if we look at the the overall number of vessels if you look at ferries. For example, is there is there percentage today in terms of how many that are electrified and. What are the projections. Let's say in 2030 in terms of ah of this is there is is might be difficult to say because you got deep Sea. You got to the feries and all the rest is there a kind of is there a number and it's a projection.
| 56:25.53 | Magnus Eriksson | Yeah.
| 56:34.54 | Magnus Eriksson | Yeah, it is well currently I looked into some statistics from from d andv on this topic ah of the total global fleet today operating operating ships. Only about 0.3% of those vessels in in use today have a battery installation on board but looking at ships on order ships being built today. The percentages has increased so then it's nearly four percent of all. But. All ships being built that has some kind of battery installation on board and and looking into Norway for instance, which is the lead country in the world in this maritime transformation. All ships being built in Norway or for Norway today has some kind of battery installation on board and that's regardless of ship type. Actually so It's not necessarily only for electric propulsion. But then to use batches on board for the energy optimization of the orciliary loads you can say so that's the trend.
| 57:40.22 | Johan | So so I guess in terms of say in turn terms of our opportunity for you. It's it's it's massive both for the new but also the retrofit I would assume then.
| 57:48.24 | Magnus Eriksson | Yeah, absolutely and we have only seen the first initial development in his market transformation. So there's going to be so many projects coming up ahead. So ah, very interesting time I adamma see.
| 58:02.69 | Johan | Fantastic.
| 58:03.82 | chrissass | Well I think we're running up against time as as Johann said I could ask about 50 more questions I think this topic is just really interesting I think from our audience point of View. Um. As things electrify and we have more of that you you talked about kind of the charging stations and and battery and storage along the way that's always consistent with everything we're doing based on Demand or based on usage and then for energy transition folks. There's also the obvious no emissions elements because. You know I look at ships I look at L and G as and as as as a gateway you know, kind of getting us to a cleaner incremental step but you're still not at 0 So if if the you said you have to be at 0 I don't know that your L and G shortship is getting into port then? yeah.
| 58:46.13 | Magnus Eriksson | No, that's true. So that's why there are a lot of l and g hybrid ships being built today so you can actually switch over to battery operation when entering into port.
| 58:56.40 | chrissass | Oh nice. So so so the hybrid kind of like we saw in the car. We we have a hybrid stage going before we get to full electric. Well I I want to thank you for coming on the show today. It has been a lot of fun. We've been a bit all over the place I love to hear entrepreneurs doing interesting things.
| 58:59.50 | Magnus Eriksson | Um, yeah, the exact Ah exactly.
| 59:15.66 | chrissass | Um, the the battery technology in in the shipping industry I think that will be a great help on Butker Bunker Fuel is kind of one of my things that that does is not the cleanest burning fuel out there by any stretch of the imagination. So I think anything we do to to reduce that is probably advantageous for everybody.
| 59:31.38 | Magnus Eriksson | Yeah, the absolute sort of thank you Chris thank you you one was nice having a chat with you guys.
| 59:34.66 | chrissass | So thank you so much for coming on.
| 59:36.55 | Johan | Yeah, great to have you on.
| 59:38.90 | chrissass | And for our audience you spend another hour listening to insiders' guide to energy I hope you've enjoyed this journey as much as I have if you have please share this episode with your friends. Do not forget to like the episode wherever you're listening that helps others know there's great content to listen to and we'll talk to you again next week