The power of clean technology: A conversation with Marc Borrett

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David Rawlings: Welcome to J.P. Morgan's podcast, What's The Deal? I'm David Rawlings, one of the show’s hosts. I'm excited to be joined by special guest Marc Borrett, CEO and co-founder of Reactive Technologies. Great to have you here, Marc.

Marc Borrett: Thank you, David.  Great to be here.

David Rawlings: You've had an interesting journey. After graduation you started in the corporate world before it sounds like starting your first business in the semiconductor space. And then of course today working in energy and renewable energy. Can you just tell us a bit more about that journey?

Marc Borrett: Yes, of course, David.  I think the journey has been characterized by innovation. Hewlett Packard was truly inspiring for me. And the first startup I did, that was a very interesting start. We were messing around with electronics; we came up with some very novel ideas, presented them to what was the toy industry at the start. And we developed a remote tag technology which ultimately Hasbro used to win the Star Wars franchise. But, actually, we'd built one of the world's largest implementations of RFID, which we didn't realize at the time.

David Rawlings: So, can you talk to us about how you got into the semiconductor industry next?

Marc Borrett: A Nokia exec bought the toy in a Target store in the states. Took it apart, figured, hmm, this could be interesting for mobile handsets. Contacted us, said, "Could you put this on a single chip? 'Cause I think this could go into a mobile handset for contactless payment." And that became the start of near-field communication. And from that we turned into a semiconductor company. We licensed our IP to 80% of the world semiconductor companies. And then Broad Comm bought the business. And innovation was the thing that had driven me in that business. And having then exited to Broad Comm I wanted to find another industry that was gonna go through a lot of change. And there was some very interesting parallels in the energy sector. And it felt like an industry that was really about to take off from an innovation perspective. And I think a lot of the colleagues and the organizations that I'd met in the semiconductor journey, felt like there was a skillset that we could apply to some of these new challenges in a new industry.

David Rawlings: Basically, you're saying you were one of the early people in Star Wars. Then near-field communications, then semiconductors. And now here you are in energy. And really, I think, providing some groundbreaking work in that space. And trying to keep the world address net-zero. I'm gonna give the listeners just my quick descriptions of what I think you do. Which is every grid wants to add renewable capacity. But it's hard for them to measure what you would say is inertia. So your business now helps a grid get smarter about its stability so they can add more renewable to the grid. Does that sound about right?

Marc Borrett: That's exactly right. And like a lot of these things, it's a bit like peeling back the skin of an onion. You eventually get to the heart of the issue. And as we look ahead and we see more and more renewables getting built out, which is great for net-zero, we start to see uncomfortable realities also emerging. Which is grid operators curtailing those renewables. Actually stopping them. And in place of stopping the solar farms, producing solar energy, and wind farms, they actually also pay gas peakers to fire up and give them stability that they think they need. And the reason I say think they need is because they use models. They don't measure the stability of their grid. Because they don't have the ability. It hasn't been possible up until now, until we developed our technology that allows us to create that real time accurate view of stability, of an entire power system, or a part of a power system. And that starts to become a really valuable tool in the control room to help them safely incorporate and use more renewables, rather than reaching a point where they feel they have to curtail them.

David Rawlings:  And Marc, how do you measure the impact?

Marc Borrett: From our data start to see that actually we can measure somewhere in the range of 10 to 30% additional capacity of stability in the power grid than their models would otherwise indicate would be available to them. And that obviously is quite a disruptive benefit to net-zero because now there's additional capacity that allows more renewables to connect and be used safely.

David Rawlings: So let's spend a little bit more time on the technology. How are you able to do this and what have you heard back from the utilities and other people you are doing business with?

Marc Borrett: The way it works is that it's something very similar to sonar. We're not sending a sound wave or an ultrasonic wave into a power grid. But we are sending a burst of power. So we build an asset, it could be a battery, it could be a big capacitor. And we get that asset to send a signal or a pulse of power into the grid. We have measurement devices that we install around the country or the part of the grid that we want to measure the stability in. And those measure exactly how much of an impact that pulse of power has had. So, we treat the grid as a black box and everything is very accurate. So we know exactly the moment we send the signal into the grid or the power wave. And then imperceptible to the grid operator, we can pick that tiny, tiny disturbance that we've created in the grid out of all of the noise that is caused by all the other things that are operating on the power system. And that gives us a very precise measurement because we've stimulated the grid with a known input. And we've measured how much that input has actually been able to move the grid slightly. And that gives us a precise measurement that we can give into the control room. And that tells them where the limits of their grid are at that moment in time. That means they can safely absorb as much renewable energy up to those limits because there's been a physical measurement created.

David Rawlings: It sounds so logical. But was this always the intent when you started the company? Did you know 12 or 13 years ago that this is where you'd end up?

Marc Borrett: I would love to say yes, but that would be a complete lie. The truth of the matter is it came about like often with innovation from a place where we weren't expecting it. So when I started up Reactive, we brought together some engineers from the semiconductor world and they had a design to try and use the power system as communications channel. National Grid in the UK went with that idea. They humored us, really. They didn't really believe that it was gonna be possible. But we sent a data signal through the entire grid in the UK and we had these receivers put around the whole of the UK, and our signal got through to all of them.

David Rawlings: Then you had to flip the model on it's head.

Marc Borrett: Yeah. What we realized is, that it didn't happen at exactly the same time as it should. So, you know, energy travels at the speed of light. And the UK isn't that big. But there were these differences in timings as to when our message actually was received by our devices. And we looked into it, and we thought, "Well, there's something inhibiting our message traveling across the UK. And the more we looked into it, we realized there was some phenomena at work. We discussed this with National Grid. And we said, "We think the phenomena is the stability of the grid. And we think we could actually switch this thing on its head and use the technology in a different way to actually measure the stability. Would that be of interest to you?" And they said, "Well, that's never been done before. You can't measure stability." They said, "Well, if you wanna go and do it, try it. And then we'll mark your homework." We did a measurement campaign by turning the technology around. We've provided them the data. And their response was, "Okay, we think you can measure stability in real-time. We're interested to take this forward as a full service."

David Rawlings: What's also amazing is a company like National Grid was willing to work with you here.

So can you talk about that as, you know, you're an inovation company. You obviously had success in something else. But here you have to convince this operator that you can help them. Talk us through that.

Marc Borrett: I think we appeal to the curious side of an engineer. All these kind of organizations have got a very strong engineering DNA. But, again, we were coming at this from a very different perspective. Still from an engineering one, but from a very different one. We weren't power engineers, which the industry is typically characterized by. We were communications engineers. And we were offering them a view into a realm of engineering that frankly they hadn't really been exposed to very much. And some of this sounded semi-plausible. And overall, I think it was the curiosity part that really won them over. But you're right it's not often and it's not easy as well.I think innovation funding really helped them having access to that. But equally there's still hurdles to get over to turn what is a promising idea into actual commercial service. So they stuck with it. Once we showed the promise, they really did stick with it because equally they saw the value and it remains an incredibly positive partnership with with National Grid.

David Rawlings: So here you are. You've got this relationship with them. There's the global initiative to get to net-zero.

So how does this develop for you? How does this develop for the industry over the course of the next few years?

Marc Borrett: Well, we're very excited about the next couple of years. National Grid are a very well-respected  grid operator internationally. And the UK in that sense has been a very interesting early market for us, because being an island, we're not very well connected with Europe, unfortunately. And so a lot of the phenomena that are actually gonna happen to grids are very evident in National Grid's grid early on. So that what we are seeing there is actually very applicable to every grid around the world. This is back to the fundamentals of a power grid. It's the same wherever you are in the world. As you start to take off big generation, which has got big spinning turbines that produce energy through those big spinning turbines, those provide a huge amount of stability. And that large generation mass is taken off and it's replaced with much smaller invertor-based generation like solar and wind, that stability is automatically reduced. And I think the fact that we're now seeing more and more investments going in at scale in many regions around the world for more renewables, those challenges that National Grid had maybe 10 years to identify and think about how they might solve are gonna play out much quicker in many other markets around the world. So we can see a very exciting path ahead of us to provide the same kind of services to every grid, hopefully, that is really going down this net-zero transition.

David Rawlings: It's such a amazing compliment to this goal of net-zero. Let's just shift for a second. So you've obviously had lots of experience over now 30 years, building and developing companies almost 40 years. What advice do you have for other entrepreneurs and growth companies, whether it be from talent to strategy? Just what have you learned that you'd love to share with us?

Marc Borrett:  I think I've always wanted to find that very tight fit of need and technology solution. The businesses that I've been involved with we've always had a very strong focus on patents and R&D. So in Reactive we now have a patent portfolio of over 230 granted patents around 34 countries. So we've really wanted to try and do things in a different way, because then you have a differentiator. And I think that is always the key thing when you're trying to raise funds, or you're trying to sell your service. The world is a crowded place and you need to have a clear way of showing that you have created value in a different way. And you can protect that value, especially from an investment perspective. So having a strong IP base investing in R&D. So we have had, I would say, the first 10 years of our life has been doing genuine blue-sky R&D which is hard. You know? That means that you are sort of always looking to the future. And actually you have to make some investments that don't necessarily pay back instantly. But then you're building a foundation and a set of services that really can stand the test of time and be viable in the market for tens of years rather than one or two years which you find in more consumer markets.

David Rawlings: Well it's amazing this technology-first mindset, and what you're able to do, and what other companies with the same mindset have been able to do. So I congratulate you on that. And if you get, like, really excited and you think about the 2030, 2040, 2050,  what impact do you see your company having on this march to net zero?

Marc Borrett: Well, we hope we will have a genuine impact because by offering grids the potential to have more capacity to absorb more renewables and equally, at the same time, not have to use gas peakers as much, there is a genuinely material carbon offset that we can create. We had to do quite a lot of analysis in our last investment round when Breakthrough Energy Ventures invested. And we can see there's a pathway to save in the order of half a gigaton per year in offsetting carbon, which is a significant number. So for a very small, incredibly niche part of the net-zero transition, we think it's got a very disproportionate positive benefit to heating and enabling net-zero to happen in practice.

David Rawlings: Great. We're gonna start to wrap up the conversation, but I think one of the final questions I'd like to leave you with, you know, it's a complicated time in the market. So on one hand you're seeing this incredible demand for renewable energy, you're seeing policies and legislation like the Inflation Reduction Act in the United States. But it's offset by a tougher capital environment, rising interest rates, inflation. Just summarize for us what conversations are you having with your investors and with your board today, balancing some of these positive and negative factors.

Marc Borrett: We're certainly not immune to the wider macroeconomic environment. But I would say if you just step back and you look at what net-zero is gonna take, so, broadly speaking, the same amount of money that will be deployed to build renewable energy, solar and wind, at scale will be needed to invest it in the grid, to actually improve the infrastructure, build more capacity, develop and install more tools, more capabilities to manage an increasingly more complicated grid to keep safe and reliable. So that is the long-term view. And we are taking a long-term view, we are seeing that the investments we continue to make are going to ensure that we will have the right product suite for the full energy value chain. Because of that longevity of the data service that we provide, we're still thinking that we can make long-term investments in growing the portfolio, broadening out the customer base on an international footing.

David Rawlings: Marc, this has been such a fascinating discussion. Congratulations on all the great work you're doing. I've really enjoyed spending time with you and just wanna thank you for joining us on What's The Deal?.

Marc Borrett: Thank you, David. Great to be here.

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