From Grid Dependency to Independence: The Rise of Distributed Power Systems

Big tech's recent CPE outlays are expected to surpass $670 billion this year, highlighted by Alphabet's planned $85 billion equity raise.

A recent JPMorgan analysis showing that over 60% of all planned data centers for 2027 are completely stalled due to power supply bottleneck delays.

And facilities and enormous amounts of power yet upgrading the traditional electric grid can take 5 to 10 years.

Well joining us this morning to discuss the future of the grid is Thomas Healy, CEO of Hyliion.

Good morning, Thomas.

Thank you so much for joining us.

Well, there's been a lot of focus on big tech catbacks.

And how it will surpass $670 billion this year and at the same time we got that JP Morgan report that 60% of future data center placements are entirely stalled by power shortages.

So tell us a little bit about how highly on on-site infrastructure could potentially bridge this gap between capital as well as real physical deployment.

Absolutely.

So the way we're going to power data centers is going to change, right?

In the past it's been tap into the grid, get all your electricity from there.

It's now moving to on-site power generation or what's called the distributed grid or behind the meter, where you actually make your own electricity right on site, and that's the.

The focus of Hleon, we've actually invented a new form of power generation.

It's these modular systems that you can stack right outside your facility, power them off of various fuels like natural gas, diesel, hydrogen, propane, and make all the electricity you need right on site so you can remove the dependency from the grid.

Yes, and Thomas, for our viewers who may not be as familiar, I understand that your generators do range from desk size units for retail to shipping containers for data centers.

So tell us a little bit about some of the economic as well as operational trade-offs when a potential business or enterprise chooses to generate its own power instead of buying it from the grid.

In order to convince the data center to move to that model of make your own electricity, you have to be able to provide electricity either faster than they can get from the grid or cheaper than they can buy from their utility, and the goal here at Highland is actually doing both of those.

You can see on screen right now one of our smaller modules, that's a 200 kilowatt system.

Think of like a Home Depot.

You'd put one of those outside to power the whole facility, a Walmart, you'd put two of those outside, and then as you mentioned, we also have a shipping container size system which that would produce over 3 megawatts of power.

And for these larger data centers, I mean some of them are.

Tens of megawatts, hundreds of megawatts.

Some of the new ones are even exploring gigawatts of power.

And so with us you just stack those systems next to each other right on site.

And to the point you made, I mean, the goal is actually produce electricity cheaper than what they can buy from their actual utility provider.

Yes, and while I have you here, can you explain some of the technical attributes that set your platform apart from the legacy power systems, because for the average consumer out there, they might be familiar with solar panels or say generators.

So walk us through this.

Yeah, so we're basing this technology off of a Stirling engine or a Stirling model, which the whole concept is inside this power system you have a trapped gas.

You heat and cool that gas very fast, like 20 times per second, and that heating and cooling causes the gas to expand and we use that to make electricity.

Now there are a few different types of power systems, so most people are familiar with turbines.

That's what most of the grid is run off of today.

A lot of you have probably heard about fuel cells, primarily thanks to Bloom Energy.

Uh, and then there are, there's also the model of internal combustion engines which Cummins, Caterpillar are the leaders in those that space there.

So we're going after the same market opportunity right when we go in and bid on a project or working with a customer, most of the time they're also looking at bloom's technology.

They're also looking at turbines, and what they're seeing with ours is that lower cost we mentioned, but also the ability to scale and really have high efficiency at various power levels.

Uh, but also the low maintenance side of things, and this is what opened up the opportunity for us to become a military vendor or supplier.

We recently announced that we're the power plant on board the new USX 1 Defiant going forward, uh, which is a brand new fully unmanned autonomous ship.

And if you don't have personnel on board now, uh, you don't have anyone there to.

Actually maintain the engine and so that's why they've been looking at our system as their future power solution because it's got that that low maintenance designed to be deployed for a year without anyone needing to do any maintenance on the actual system, which is a breakthrough, right?

That's a game changer in terms of how the military looks at how they can produce electricity.

And very quickly Thomas, before I let you go, I do want to ask you how you're currently managing investor expectations, especially when it comes to your timeline for converting current non-binding letters of intent into your commercial pipeline.

Yeah, so we, we've hit some great milestones recently.

The stock thankfully has responded to that.

We recently announced that we've completed all the non-recurring UL certification testing.

That's one of the big milestones for us to enable customer on-site deliveries.

So last year we started delivering to the military.

This year we're starting actual commercial deployments and then from a backlog standpoint we signed nearly 400 or actually over $400 million worth of LOIs.

So if you look at kind of current price of the system, add up all those letters of intent, uh, we've got a very strong customer backlog and interest and as we go into later this year, next year we'll start getting more units out there and then into 2028, 1 of the big goals is really starting to scale manufacturing behind this technology because.

You know right now we are definitely in the supply limited side of things uh we've got a tremendous amount of demand for customers and we're looking to uh start to deploy towards that backlog of interest we have.

Well, Thomas, we will have to leave it there for today, but thank you so much for joining us and thank you so much for sharing the story of Jai Leon.

Thanks for having me on.