AI and Energy Storage: A Fresh Approach

As companies and investment firms rush to capture value via AI, more energy is needed to run the data centers that power that technology. Rising demand is creating challenges that require novel solutions, and investors are watching closely.

Mark Weathers, the CEO of Energy Internet Corporation, joins the podcast to share his company’s innovative approach to energy storage and other developments in the AI data center energy space.

Read a transcript of the podcast below.

Middle Market Growth: Welcome to the Middle Market Growth Conversations podcast, an ACG production, I’m Carolyn Vallejo. As AI use cases proliferate, the energy demands of the data centers that power them call for innovative energy solutions. Energy Internet Corporation is one of the companies stepping up with a novel approach to energy storage. And today we’re joined by their CEO Mark Weathers to discuss developments in the space. Mark, welcome to the podcast.

Mark Weathers: Thank you, Carolyn. Thanks for having me on.

MMG: Absolutely. Now, Energy Internet Corporation (EIC) addresses some pretty unique challenges in the renewable energy space. To start our conversation today, could you tell us in, you know, layman’s terms, what it means and how it does what it does differently than its competitors?

MW: Yes, I certainly can, Carolyn. I promise there’ll be no math. There could be a quiz at the end, though, so pay attention. So, let’s start with the problem. You know, renewable energy sources like solar and wind have got some real advantages. They’re the cleanest, they’re the cheapest that are out there, but there’s some real disadvantages, namely, that you can’t command them to come on at will. So their ability to help us with the climate change issue is relegated by their variability. And so what EIC is doing is providing storage that can mitigate that problem of variability. So, most of your listeners are probably well aware of what they call the duck curve in California, where the sun is strong in the middle of the day, and there’s plenty of solar energy, sometimes too much, and then towards the evening where the sun’s going down, but the demand is still strong, there’s not enough. We certainly see that in Arizona. There’s a lot of sun here, hardly a cloud ever, but by the time the sun starts to go down, it’s the hottest part of the day, everybody’s turning their air conditioners on and the demand’s going up. So having very large amounts of storage removes that problem from the renewable forms of energy and makes them usable and dispatchable just like fossil fuel. So that’s what we’re all about. We use compressed air as like a giant spring to store this energy. So, if you’ve ever been to say, Discount Tire to get your tires changed, you remember that distinctive sound of the air tools that take the nuts off the tires, that <inaudible> sound, that’s compressed air doing its work for the mechanics there. We’re using that same principle. We’re taking electricity, we’re compressing air to very high pressures, and we’re storing it. And then when we need it, we release that air and it drives the generation of electricity at the right time. This is actually not something that’s new, there have been plants around doing this at grid scale since the seventies, which I was surprised to find out when I got into this. And there’s a lot of renewed interest. In fact, there are many plants being built, particularly in China right now. And the reason is that compressed air is one of the few technologies that can really store the amount of energy that’s needed to offset these big swings in the grid when there’s a lot of renewable energy involved. So, we do have a bit of a unique take on this, and that’s because we’re able to compress and to expand without changing the temperature of the air by very much. You’re probably thinking, well, that’s nice, but so what? Well, that’s sort of a big deal. Again, without getting into heavy thermodynamics or anything, not having to deal with that heat buildup while we’re compressing makes a very big difference in our efficiency.

I’ll give sort of an example that’s not perfect, but it’s a fair analogy that would help the listeners understand. If two people are getting ready to hike up a steep mountain and it’s a hot day, one of them, let’s say Betty is wearing a t-shirt and shorts, and she’s going to stay cool on the entire trip. Her friend Bob, for some reason, has a giant coat on and he’s all wrapped up. And so, as they start up the hill, Bob’s going to get hotter and hotter, and he’s going to have a much tougher time making that same hike than Betty will. He can take his coat off at the top and release all that energy, and eventually, Betty and Bob will be at the same body temperature. But he has done a lot more work to get to the same point that Betty did. And so it’s sort of the same thing with this air compression. If you don’t do it without getting rid of that heat, then you’re putting a lot more work into the process. And the same is true on the expansion side. When you’re expanding a gas that’s at high pressure, it becomes very cold. And so the same effect can be seen on that side of the equation, although the analogy doesn’t work as well there. So, basically, what I’m saying is our unique proposition is we’ve developed equipment that will compress and expand the gas without changing the temperature a lot. And that gives us a huge efficiency advantage over other technologies, other forms of compressing air. You can imagine if you wanted to store gigawatt hours of energy, then a few percentages of losses make a big difference. But there’s one other thing about this approach that’s even more important, and that is that if you don’t have to deal with that heat that’s generated or the cooling during expansion, then you can store the energy for a lot longer period. So, if you do try and store the heat and reuse it when you’re expanding to offset the cold, then you’ve got to pay for the storage of the heat and for the storage of the air. So, by not having to deal with that heat management issue, we can store energy for hours, days, weeks, even months, where very few technologies can approach. So, that’s the unique thing about what we’re doing. I hope that was clear enough.

MMG: Yeah, absolutely. Wow. So, you certainly solved a problem in this space, and I imagine there are, of course, several use cases for this technology, but I know that data centers are a particularly attractive one for EIC’s technology and infrastructure. Could you tell us why data centers are such a key use case particularly in the context of rising adoption of AI? Why does that increase the need for a solution like EIC’s?

MW: Yes, very popular topic these days. So, electrical generation, at least in this country, has been fairly flat. The demand has been fairly flat for a while. Globally, it’s going up as new emerging countries raise their standards of living, as everybody tries to electrify for carbon reasons. But in particular, what’s driving the growth in this country right now is our digital economy and the data center usage that goes with that, and in particular the AI piece. I’m sure most of the listeners are well aware that AI takes a lot more energy than a standard data center. These are very large amounts of data and very iterative sorts of transactions that happen with that data. It consumes an enormous amount of power just to run the chips. And then everything that goes into that from an energy standpoint become most of it becomes heat, and that’s got to be removed as well. So, the incredible load that that’s putting on the grid and the pace of growth that’s foreseen for AI in particular is really outstripping the ability of the power generators and probably even more the case, the distributors and the transmission lines for the power. So, the demand is now the data center. People are looking everywhere they can for power sources. The lead time to build the capacity and the lead time to build the transmission lines to get to where they need to be is much longer than the lead time to implement these technologies. And so we can do a couple of things to help that. If you want to put your data center out more or less in the middle of nowhere where there’s plenty of land and you can use solar or wind energy to power the data center with storage to make sure that it’s on all the time, then you can locate the data center in a place that’s much more amenable and may or may not be necessarily tied to the right power source. It may be out in the middle of Nebraska where there’s a big fiber backbone running across plenty of open land and otherwise would not be accessible from a power standpoint, would have to wait, you know, three, four years for that to happen. So our ability to separate the generation from the grid and make it local and to store that energy and make it reliable and to do it in a clean way, which the data center people are very mindful of, gives us a real advantage in the data center world. And the compression and expansion technology is really what refrigeration is. So we can provide the cooling for the data center at the same time with the same equipment.

MMG: Now, you and I actually spoke several weeks ago as part of our Next Target report on EIC, which by the way, is out now, published on middlemarketgrowth.org. When we talked, it was soon after President Trump had declared a national energy emergency and his administration has signaled plans to pull back on renewable energy initiatives. So, what do you think about all this? How does this new administration impact your outlook for clean energy in the U.S. and what EIC is doing?

MW: This is the part of the conversation that’s like the Thanksgiving dinner where somebody brings up religion or politics and nobody remembers anything else after that. So, yeah, very controversial subject and a lot of opinions on this. It’s sort of a shame that, you know, we politicize climate change and green energy because it’s truly the one thing that affects everybody. It’s the proverbial, you know, you can’t have a hole in your side of the boat; we’re all on the boat and a hole is a hole, so it affects everybody regardless of political affiliation or where you live or any of that. But it is a topic that draws a lot of controversy and there are a lot of opinions around it, and it makes for good rhetoric that draws votes. So, I understand why it gets a lot of publicity, but the bottom line is that to help our country, the best thing that we can do is to invest in technologies that are going to create jobs and create security here. A great example of that would be solar energy. Twenty years ago, it was completely economically impractical, but the subsidies that were produced allowed those sources of energy to develop and the technology developed to the point now where it’s the cheapest form of energy out there. Unfortunately, like so many things that have been invented in this country, we allow the manufacturing and the expertise to go overseas. And now we’re in a battle to try and regain that supremacy and bring that technology back here, and it’s much tougher. So, to the extent that political policies can support the new technologies that are coming along and help them get off the ground, that’s the best way in my opinion to help our country. And now is the time to do that while these technologies like ours are relatively new and still carry some risk and not after they’ve left the country and have to try and bring them back. So, I hope that things change at the end of the day, though. All that being said, what really drives the adoption of renewable energy or any technology for that matter, is the economics of it. So, politics, you know, provides maybe a headwind or a tailwind to that, but capitalism always wins in the end. If the renewable forms of energy with storage are as cheap or cheaper than the other competing sources of energy, then people will adopt them. And so, regardless of what happens with the politics, ultimately the technology needs to be there. And so that’s what we’re counting on and that’s what we’re seeing.

MMG: Mark, I’m going to make you keep the Thanksgiving conversation going because at the same time, the Trump administration has also signaled support for energy infrastructure development specifically to meet AI data center energy demand. So, there’s been a lot of movement from both the private and public sector. Companies like Meta have plans to develop AI data centers and strike partnerships with energy producers to power them. So, how does movement and some of these initiatives on AI data center development and the consequential growing demand for energy to power them influence your outlook?

MW: It’s a monumental effect. It’s probably the single biggest driver for us. As we sit here and speak, there’s a tremendous amount of interest from the data center providers and the AI users to be able to find adequate power to support this growth because of the problems that we talked about earlier. So, it’s probably the single biggest influence that we’ve got. It’s got huge potential. There are so many applications that we haven’t even dreamed of. And so, there’s not going to be any stopping the rollout of AI and the power consumption that it takes. It’s absolutely the biggest driver in terms of our potential outlook in the near term. And, you know, the genie is out of the bottle at this point. And there’s no way to mitigate that or to stop it. It’s got many uses and it’s going to happen. I just hope that nobody types into AI “solve the climate problem,” and the next thing we know, we’re in a Terminator movie. That’s my only fear.

MMG: I certainly hope so too. Things are moving so quickly in this space. It’s pretty unbelievable. And also, since we last spoke, DeepSeek has come onto the scene from China. It seems to have really rattled the U.S.’ confidence as the world’s leader in AI. Analysts say DeepSeek is more energy efficient than much of the AI technology here in the U.S. So, do you anticipate any competition from China or other global AI innovators in terms of driving support for powering these data centers using renewable energy?

MW: Yes, certainly. And I think there’s probably a couple of questions sort of wrapped up in there. You know, some people have postulated that things like DeepSeek are going to reduce the energy consumption. So this big power concern that everybody’s got will go away. But I’m a firm believer in what most people have heard of at this point, Jevons Paradox, which says that something that’s more efficient will not necessarily result in the use of less energy. Because it’s more efficient—it’ll be more popular, and the energy usage will actually go up. And that’s been seen many times. So, regardless of whether it’s DeepSeek or the Alibaba product or quantum computing or any one of any other improvements in technology that will come along, that demand is still going to be there. And it’s only going to accelerate. I mean, I can picture the day when I have a robot dog, and he’s trained to go fetch beer out of the refrigerator. I don’t want that robot dog with a diesel generator strapped to his back, so he’s going to have an electrical power source, the refrigerator will, and the learning that he’s got to do to go find the beer behind the milk, you know, is all part of that electrical load. So, I don’t think that anything is going to stop the demand for that. I do think, as you said, that many people recognize how important AI is to global economic position and to economic and military security and to the way of life. And so there will be tremendous competition, tremendous innovation and endless innovations that come from the AI arena that will all require power. And so I see this as going on for many, many years as a driving force in what’s happening in the energy world.

MMG: Now, you and I are talking about some of the biggest players in the world in this space, but there is so much innovation happening further down in the market in the smaller middle market. So, for those investors that are playing in that field, in the middle market, what should they be on the lookout for if they are interested in backing a solution like EIC’s? What should their due diligence look like? What’s kind of what they should be looking for under the hood?

MW: Yes, great questions. So, you know, all good VCs know that beyond just the regular diligence stuff—you know, is the technology real, can it be scaled—that the team is really critical. And that’s even more the case now because things are changing so fast when capitalism and innovation are riding together. You know, things change all the time and so the ability of the team to adapt and to pivot and to reconfigure and to go after new solutions and new opportunities is critical to any startup, especially. Now, another thing I would say is take the long view. People are generally looking right in front of them. When you learn to drive a race car, they tell you don’t look right in front of your wheels, look down the track so you can position the car where you need to be. Or as Wayne Gretzky would say, skate to where the puck is going to be, not where it is—the opposite of every little league soccer game that you’ve ever seen in your life. And so, the message there is look for solutions that are going to be viable 10 years down the road, not right now. And that’s particularly applicable to the storage thing because there’s all kind of technologies out there that can do hours or even days at this point, and that field will continue to grow and get even more crowded. But there are a few technologies that can really do the big picture and be able to offset the variability of these renewable sources of energy when they’re 50% and 60% of the grid. And so, my advice there is look down the road and look for the big picture. And finally, it’s pretty obvious, I guess, is to do the math. There are many technologies out there that have got some really cool features and check a lot of the boxes, but, if you really look under the hood and start to do the math, don’t necessarily make sense. I’ll sort of pick on direct air capture of carbon dioxide as one of those: The sheer scale that it would take and all the devices and all the money and all the energy to literally vacuum parts per million of carbon dioxide out of the air is really unrealistic in my opinion. It would just require a growth rate that’s unfathomable. It would make a lot more sense to go to the sources of the carbon dioxide, like a generating plant or a steel plant or a cement plant or wherever it might be and capture it there where it’s in the 10-20% range. So my point is, do the math and don’t get fooled by things that look good right now, but really don’t solve the problem in a big way because they won’t be around forever. Don’t fight the physics, I guess is what I’m trying to say.

MMG: Don’t fight the physics. All right. Mark Weathers, thank you so much for joining the podcast. We really appreciate it and I’m so glad we got to reconnect.

MW: Thank you, Carolyn. I appreciate it.

MMG: And for our listeners out there, if you would like to learn more about Energy Internet Corporation and potential investment opportunity in the AI data center energy generation space, be sure to read our Next Target report out now on middlemarketgrowth.org and in the upcoming issue of Middle Market Dealmaker, reaching mailboxes in April.

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

The Middle Market Growth Conversations podcast is produced by the Association for Corporate Growth. To hear more interviews with middle-market influencers, subscribe to the Middle Market Growth Conversations podcast on Apple Podcasts, Spotify and Soundcloud.