MS는 FTA를 장기 발전이 아닌 '브리지 파워'로 본다

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Thank you for being a part of the Tegus community. Have a great call.

Hello?

Hi.

Hi, how are you?

I'm doing good. How are you?

Good. Good. Um, thank you so much for taking the time for today's call.

No.

Um, I'm so sorry, but can you speak up a little bit? Because the voice that I'm hearing is somewhat quite low.

Am I audible to you?

Oh, yes, much better. Thanks.

Okay.

Um, mm-hmm. So to briefly introduce about myself, my name is Eujung Lee. You can just call me EJ, if that's better, from Most Asset Management. And we are a hedge fund based in Seoul, Korea, with AUM of approximately two billion US dollars. And we invest our asset globally based on in-depth research.

And currently, I am doing a research on FTA, as you are aware of.

Yeah.

Mm-hmm. And from today's call, I would like to better understand where FTA stands today from a hyperscaler customer's perspective, including qualification progress, customer interest, commercial traction, competitive positioning and execution readiness.

Sure.

Mm-hmm. So can you also briefly introduce yourself before we start?

So yeah. Hope I'm audible to you clearly, right?

Um—

So—

If you speak up a little bit more, that would be much helpful.

Is it better now?

Uh, yes, yes.

My name is Ponendu. I'm part of the design and delivery team of Microsoft, where I'm part of leading the delivery of new and large scale data centers and AI-integrated data centers—

Mm-hmm.

... for APAC. In my day-to-day job, I am responsible for planning, designing, vendor evaluation, procurement support, costing, driving execution, product development support, quality, safety, environmental, and driving the delivery of the data center, and after that providing the necessary training and support to the data center operations team.

And, you know, enabling them throughout the process of establishment of the data center.

Mm-hmm.

And then, you know, managing multiple sites as well.

Mm-hmm. Mm-hmm.

So that's actually my role, where part of it goes towards building new strategy and new development as well, and supporting different teams from design, products, supply, fibers, security, safety, different departments.

And I act as a center box to them and help them and provide them necessary support. And I'm one of the key decision-makers—

Oh.

—as well as the part of the team—

Mm-hmm.

—who takes the ownership of, you know—

Mm-hmm. Mm.

—and new kind of technology. Yeah. Yeah.

Oh, great. Thank you.

Um, so to start with, regarding the qualification process and the current status of FTA, I remember that you mentioned on the previous call that the first stage evaluation has largely concluded from a market and technical commercial perspective. Could you elaborate on what this means in practical terms and maybe in layman's term?

Like, what has likely been completed and what key milestones remain before Microsoft could place an order?

So I think from Microsoft perspective, I would position FTA as a bridge power versus acceleration solution, not yet as a primary long-term generation platform.

Mm-hmm.

So for Microsoft or similar hyperscaler, the hierarchies usually we look for preferred long-term solution.

Mm-hmm.

So usually through preferred renewable PPAs, transmission build-outs, or long-term contracted clean energy. Then we focus on strategic risk solution, where on-site gas generation, aeroderivative turbines, reciprocating engine, fuel cells, and temporary modular generations.

And then we focus on emergency solution, like short-term diesel or temporary generation during grid delay or outages. So FTA today best fits in the second category, where we want to bridge to grid or power acceleration solution for our upcoming AI campuses, where compute demand is ready but utility capacity is delayed.

Hmm. Uh, thanks. So what kind of evaluation did FTA go through regarding those first stage? Uh-huh.

Okay. So—

—those first stage? Uh-huh.

Correct. That's the right question. So how do we evaluate if we have to evaluate FTAI capability—

Mm-hmm.

—and what kind of evaluation we are currently doing? So the evaluation happens around different spaces.

So on the technical front, we do it, start with the engine credibility. So for example, CFM56 is a mature aviation engine family with a large installed base, which gives comfort on core engine reliability. So the strength is that FTA is not inventing a completely new thermodynamics machine, right?

Then we evaluate on the conversion credibility, which is the risk is not the aircraft engine alone. Basically, the risk is converting it into a stationary power product with controls, generator coupling, emissions package, enclosures, cooling, fire system, fuel system, and data center grade operating model.

Then the third evaluation criteria would be packaging and balance of plant capability, which means hyperscaler need a complete power block, not only an engine, right?

Mm-hmm.

So engine is just generating source, right? We need to transfer that energy back to utilization in a manner that it can be converted into an electrical energy form, right?

Mm-hmm.

So the package must include generators, controls, protection, transformers, exhaust, NOx treatment, noise control, which is also big issue, maintainability and remote monitoring. Then the fourth evaluation criteria would be services and spares. So data center just cannot wait weeks for engine swaps or critical parts, right?

So FTA must prove spare engine availability, field service coverage, response time and SLA discipline. And the last would be execution capacity. So FTA public ambition of around hundred turbines or let's say two point five gigawatt per year is attractive.

Right.

But hyperscaler will test whether this is a factory-ready capacity or aspirational capacity.

Mm-hmm.

So, so as FTA expected capacity of about hundred tons or two point five, uh, gigawatt per year. Yeah. So in my view, FTA has a credible technical starting point, but it still need to prove industrial scale packaging, field reliability, permitting and service execution.

Oh. So it seems that, uh, Microsoft evaluated-- started evaluating FTA's aeroderivative engine starting from like-

Mm-hmm.

-late last year, right?

Mm. You're right.

Uh, so for the past six months, Microsoft evaluated on its, um, evaluated FTA for all of those five criteria and only the First criteria were met up until now?

Correct. You're right.

Meaning that for the, for the rest of like, r-rest of, uh, four criteria remaining, it's still in a review process? Or-

True. Because it's a first of its kind of solution.

Uh, so far in data center industry, there are two sources of power, right?

Mm-hmm.

One source was predominantly the electricity board. You get it from grid, and that grid power supply is connected to your data center. Then second would be, you know, the backup power, which is your diesel generator sets. So those are the proven solution for many years, right? For many decades, I would say.

Now, this is something which is completely new, and the indus- and the company which is having aspiration to build this capacity is not proven in the market. They are having a proven engine, which is CFM56. But converting that aero level engine into a power generating, uh, unit is still, you know, work in progress. So you're right.

Apart from engine credibility, point number two, three, four, five are still under review and assessment is, uh, going on.

I see. Then, uh, roughly in order for Microsoft to, um, have a conviction on FTA, meaning, uh, FTA showing, uh, good signs on the, on the remaining four criteria, like how long will it take, uh, like on average?

You see, the way I would say hyperscale demand is growing-

Mm-hmm

... right? You're saying the evaluation completion from Microsoft or the way or, uh, how fast it is expected that FTA should prove against all those four points? What is the question?

So-

Am I audible?

Uh-

Yeah.

So you mentioned that, uh, there are like five criteria that Microsoft-

Yes

... is evaluating, uh, regarding FTA's aeroderivative engines. And-

Yeah

for the past six months, a period of evaluation process, um, FTA shows some positive result on this first criteria, and for the rest of four criteria, it is still like an ongoing process. And I'm curious, like, how long will it take f-for FTA to, uh, complete all those, uh, four criteria evaluation, uh, process and in order to become like the official ve-vendor for, uh, Microsoft?

Correct.

So l-look, point number one and two, engine credibility and conversion cre-credibility are pretty much single point.

Uh-huh. All right.

In, in, in a way to understand, engine is their key USP. They know what kind of engine they're proposing, right?

Mm-hmm.

It's a thermodynamic machine, right? But conversion credibility is the key.

Can it become a, you know, a, a source for power generation in the data center industry? So these two assessment is going in parallel.

Mm-hmm.

All right? Uh, remaining three, uh, areas, packaging, plant, balance of plant capability, [coughs] service and spare and execution capacity, right?

Mm-hmm.

So packaging and balance of plant capability may take more time because that is where, you know, the whole production will happen, the whole, uh, uh, what we call it, the whole, uh, assembly would happen, right?

Mm-hmm.

For everything, right? And, uh, then if the current plant capacity is not sufficient or they have a aspiration to build a two point five gigawatt supply per year, they have a plan to expand it for next three to five year.

Then they have to give us the clarity in terms of what would be the next one-year plan, two years plan, three years plan till there is the final year-end capacity. And then, uh, from there they have to submit us the, the details related to packaging process, uh, uh, you know, how and what they're going to package and how and what way they will mention that the noise control, NOx treatment, maintainability and remote monitoring is going to happen.

So this will take another three to, uh, four months' time for them to complete it.

Mm-hmm.

And service spare and execution capacity will parallelly happen with point number three. So in short, I would say in next six months' time-

Mm-hmm

... uh, things would move in a positive direction.

Mm-hmm. Uh, thanks.

Then, um, if or like once FTA clears all those criteria evaluation process, um, what kind of like, um, order volume can we expect, uh, FTA can receive from, um, M-Microsoft, like...?

So look, Microsoft or any hyperscaler-

Mm-hmm

... uh, uh, are building AI data center in large scale now.

Mm-hmm.

You would be putting, you know, multi-gigawatts announcement-

Right

... going on, right?

Mm-hmm.

Here and there. So at least I would believe that, uh, for US market and, uh, Europe market-

Mm-hmm

... where, uh, they Will get the clearance from statutory standpoint or legal standpoint, right?

Mm-hmm.

They can quickly start pushing the capacity because first of all, you know, immediately the numbers won't go high because any player be it Microsoft, Google or, um, Amazon, they would like to test the performance first, right?

Mm.

They would like to understand whether the product is, uh, going to be successful or not.

Mm-hmm.

Right? So for doing so, they will implement and start the production. They will start the i-implementation from, let's say, fifty to hundred megawatt, which can, you know, pick up to five hundred to eight hundred megawatt and will go beyond one gigawatt plus.

Mm.

Right?

So, uh, what will happen in next twelve months for FTA to be credible, if you ask me from Microsoft lens-

Mm-hmm

... okay? Uh, one fully packed demo unit operating under realistic duty cycle that would be deployed, let's say. And then there would be third party technical validation of performance, heat rate, emissions, noise and availability would happen.

Then, you know, the clear maintenance intervals, engine shop strategy would be studied. Then, you know, bankable warranty and LD structure would be reviewed. Then, you know, proven generator controls, protection and switchgear integration would happen. Then they have to partner with EPC and OM part- OEM partners. Then they have to confirm the spare parts and field service model.

Then they have to confirm the permitting, the permitting and approvals roadmap for the key markets. Then, you know, they have to provide their financial strength and financing structure, and then a phased deployment plan with all risk gates. So FTAI, uh, does not need to prove, you know, three gigawatt immediately.

It needs to prove the first twenty-five to hundred megawatt, which I said, right?

Mm-hmm.

So that they can operate reliably and can be repeated. It would be reputation only. Once the initial model would be proved, then I think, uh, it would be just reputation, right?

Mm-hmm. Mm.

And, uh, based on your evaluation of FTA's aeroderivative engine regarding its, uh, like engine credibility and the conversion credibility, um, how would you think of its, uh, like capability or, um, like technical-- in terms of like technical level against like other competitive peers or, um, other alternative options?

Other alternative options?

You, you mean other alternative of similar type or from the engine standpoint?

Meaning like, um, is that FTA-

The supply-

Is, is FTA the only player that is providing-

No, no, FTA is not the only-

So- sorry?

FTAI is not the only player.

Right. Right. So I guess that currently Microsoft is evaluating FTA versus like other aeroderivative engine providers, uh-

As well? Yeah.

Yeah. Yeah. So-

So for ex- for example, I would say, uh, I will name multiple players, not just one or two.

Mm-hmm.

There's a GE Vernova, Siemens, there's a Boom Supersonic, there's a ProEnergy, Solar Turbines, Caterpillar, Cummins, right?

Right.

So all have a very, you know, stronger near-term operating track record in distributed generation.

Mm-hmm.

May not offer the same gigawatt scale AI narrative, but, uh, I would say, for example, GE Vernova, they have a strong bankability, they have a strong installed base, utility confidence is very high, they have a very strong service network and proven, you know, grid scale generation.

Mm-hmm.

Disadvantage is, I would say, long lead time.

When it comes to Boom Supersonic, they have, you know, a very strong speed to market story.

Mm.

And has, you know, public momentum also after, you know, Crusoe one point two gigawatt order, which is a public news, right?

Mm-hmm.

But still a new entrant in stationary power. They are still a new entrant. The Boom SuperPower turbine is, you know, having a forty-two megawatt solution.

And, uh, Crusoe order total is about one point two gigawatts. So, you know, you can do the math. Another, which I named you ProEnergy, Solar Turbines, Ca- Caterpillar, Cummins, they having a, you know, stronger near-term operating track record in distribution-- distributed generation, but may not offer the same gigawatt scale, right?

So for FTAI, I think the main focus area should not be the best efficiency anymore. I think they should more focus about speed, modularity, and solving the wait time problem. At the moment, you know, I'll tell you one thing. No hyperscaler is much worried about, uh, putting money.

Mm.

They are more worried about time to market at the moment.

So I would-- If I would be in place of FTAI, I would say that, you know, your priority should-- today should be speed to power, availability, reliability, permitting feasibility, scalability, modularity, CapEx, fuel efficiency, emissions. These are the primary focus area which would more resonate with Microsoft or hyperscalers.

Mm.

Does it make sense for you?

Mm-hmm.

Sorry, I missed your, um, comments, uh, earlier. So currently hyperscalers only care about, uh, time to market, like- uh, rather than the price. So it aligns well with, uh, FTA's-

Rather than efficiency only.

Oh, sorry.

Rather than efficiency only.

Ah. So you're meaning that, um, FTA's, uh, competitiveness, uh, of, of providing speed to power well aligns with hyperscalers' current needs, right?

Yep. Yeah.

Mm-hmm. Mm-hmm. I see. But, uh, what I'm con- what I'm worrying is, um, as you are aware of this, um, aeroderivative engine business for FTA is quite, is, is, is very new to FTA as well.

Eh.

So I'm w- uh, wondering, like from hyperscalers' perspective, would, uh, the execution capability of FTA, uh, is one of the points that, uh, that-

The concern?

-hyperscalers worry about or...

Mm-hmm.

Point of concern you're saying?

Mm-hmm.

You're saying whether FTAI execution capability is a point of concern for hyperscaler, right?

Right. And also whe- um, whether FTA's, uh, execution capability is at a level that, um, that hyperscalers, uh, require, like hyperscalers, like a threshold level. Mm-hmm.

You see, uh, you have asked me a couple of questions.

So, so one is definitely hyperscaler would review very, very strongly on the execution capability of FTAI.

Mm-hmm.

All right?

Mm-hmm.

And that is the reason which you asked me the question, right? What would be the scale of order which can be given to FTAI, right?

So I would say that FTAI have to prove their execution capability, their service support capability, their reach to the market, their ability to secure all necessary permits and approvals, which geography they can, you know, secure those approvals so that they can execute the work, how their network partner model would work. Let's say FTAI may not be able to serve every market directly.

So will they going to do a partnership with, you know, local players to deploy their turbines and, you know, provide the necessary technical support, and the local player would help them in driving the execution. So how they're going to develop their, you know, relationship with the general contractor or EPC contractors and the generator site vendors to integrate the whole solution, which will be a foolproof solution.

And then, you know, delivering the project, which will be, you know, meaningful for the customer from the timelines, quality, and performance standpoint. After that, I would say there would be a scope for FTAI to get the bigger orders and grow in the market.

At the moment, since they are a new entrant, they have to prove a lot from execution capability, delivery timelines, quality, maintenance support, any failure management, risk management, how they can swap if any engine failure would happen, what would be the timelines for that, the cost competitiveness.

I think all these areas FTA have to, you know, look at and really build their muscles around it.

Right. And based on your, uh, like interactions and conversation that you had with FTA people, um, how would you rate, uh, their, uh, capability in terms of like ser- providing the service, execution capability, um, et cetera?

So I think on the paper they look strong.

Mm-hmm.

Um, [chuckles] but, uh, when, when we will test... When we'll do the pressure test, right? And then the real pressure test would happen when we will give them an order, and then they will meet that order. So today they are saying that they have the, you know, production-ready sites, and they can execute the project.

So I think in next few months, from supply chains lens standpoint, as I told you, right, uh, we would review their capability on different areas. And if they qualify, then definitely we will, you know, give them some opportunity to work with us. Not only large scale, but lo- let's say on the initial scale of twenty-five to hundred megawatt.

And we will see and support them as well in terms of delivering those projects. And if we found that their capability is strong and they can deliver this project, definitely we will help them in getting more orders with, through us, and we will work with them in the longer term as well.

Mm-hmm. I see.

Um, so, um, so it seems that, uh, Microsoft would first give like an initial pilot, uh, order, uh, of like two hundred to three hundred megawatts to FTA.

That would depend on the-

Uh-

That would depend if they qualify the whole process.

Oh.

Because ordering will not be a unilateral process. It would be a very structured process where a lot of competitor players would also participate.

And post the detailed RFP process, if FTAI would qualify, then there might be a possibility, if everything goes well, they will get the order.

Hmm. Then what i-- what do you mean by, um, like pressure test giving them the orders?

So let's say, uh, if there would be less critical size for us, which may not have major impact in our network, right?

Mm-hmm.

Probably if you have to give some playground to any new r-rookie player, right? How would you give them? You will give them a, you know, site where they can, you know, start working, and if they prove successful in those areas, you may give them opportunity to work in the longer areas, bigger areas.

Or the second point would be maybe Microsoft would say then, "Okay, you deliver some other projects and show us the credentials." Maybe, maybe FTAI would like to say, say that they are working with, let's say, Google or AWS or somebody else. And once they will deliver couple of projects, maybe Microsoft would, uh, use them once they have proven their capability.

Because testing any new player without any credential would always be a risk.

Mm-hmm. Oh. And that testing would happen in the coming three to four month period?

It could go more if, if, uh, they will not be able to certify and provide the clarity back to the hyperscalers, not specific to Microsoft, I'm saying.

Mm.

Because it seems that, um, after FTA announced that they are entering this, um, aeroderivative power engine business, uh, back in late last year, um, they hired lots of professionals from, like Blue Origin, like SpaceX, uh, Siemens, et cetera. So-

Okay

...and since you have been interacting with FTA for the past, uh, six months, have you noticed any, um, change in the, in FTA's like, uh, technical improvement or like, uh, improvement in, uh, the level of conviction that they can, uh, successfully ex-execute?

So see, uh, the assessment, uh, does not happen at country level, so I'm not directly overseeing the assessment of FTAI at the group level.

Mm.

All right?

Mm-hmm.

Yet to know the updates, uh, about any new development, all right, if it is happening. So the assessment level is happening at the, uh, headquarter level, where the product development team is working with these players and trying to understand their capability and their ability.

They will definitely seek feedback from us about their presence in the local market or how and what way we can integrate them if let's say they want to work in India, or they want to work in Southeast Asia. So how and what way the capability support can be provided to them or which players can actually be a potential partner to them.

They may come and talk to us as well, but mostly it is happening at the global level-

Mm

... at the headquarter.

Mm. I see.

Then, um, so, um, for the-- over the past six months, um, how would you characterize hyperscalers' interest in FTA today? Like, um, has interest increased, uh, or remained somewhat stable?

Sorry, come again.

So, um, from hyperscalers' perspective-

Okay

...uh, over the past six months, um, how, how do you think of hyperscalers', uh, interests in FTA currently? Like, has their interest, um, increased or remained somewhat stable?

So I think, uh, the confidence in the market opportunity has increased-

Mm-hmm

... because the power shortage has become more visible and because the market has shown willingness to consider non-traditional solutions, right?

So the confidence in FTA specifically is cautiously positive, but unchanged on the execution risk, which we discussed, right? So the opportunity is stronger, but the proof points still need to come through, which means the operational references, factory re-readiness, emission compliance and hyperscale grade service, which still need to be proved.

So definitely the, the confidence level have gone up, but not to that extent where we are completely sure about engaging.

Hmm. So would it be safe to assume that, uh, based on your obser-observations, um, uh, FTA has, uh, somewhat advanced beyond, uh, conceptual review and enter more like a formal qualification or procurement planning process?

Sorry, come again?

So based on your, uh, observation, um, can... Um, would FTA, um, has advanced beyond conceptual review and entered a more formal qualification or procurement planning process?

Yeah, yeah. So they will enter into the more pro- you know, into the procurement planning process. It's a part of the procurement pre-qualification only.

Mm.

You understand, right?

Mm.

So if we are evaluating any vendor, it is a part of the procurement pre-qualification only. It is not just the, you know, uh, side works. We do it with the interest that, okay, do we have to look at the new solution? If we have to look at the new solution, which players we should focus upon on studying their performance, market presence, so and so forth.

So this whole activity is a part of the procurement pre-qualification as well.

Mm. Mm. 'Cause I was curious, um, when you interact, uh, with FTA, uh, or observe their discussion with, uh, potential customers, uh, how confident do-- does FTA appear regarding their ability to deliver, like, large scale deployments?

So as I said, uh, from general hyperscale perspective, if I say today FTA look very confident on papers—

Mm-hmm

... because of their, you know, ventures and investments and the kind of, you know, announcement they are making. But they still have to prove their, you know, uh, execution capability, right?

By, you know, uh, they still need to prove points on the operational references, the factory readiness, emissions compliances, and, you know, hyperscale grade service. So once they do all this, I think, uh, the possibility of their engagement could go high with any hyperscaler.

Right.

So, and I'm curious, um, based on their, uh, actions regarding proving their, uh, its execution capability so far, um, do you think that their, um, execution capability somewhat aligns well with the what's on the paper?

So execution capability, you know, uh, can only be tested once you deliver the project or you start the execution.

Oh.

Yeah.

'Cause I, I thought that there would be some signs, like pre-signals that, um, hyperscalers can catch even before, like, the actual delivery starts.

So I don't think so. The stage have reached where even order have gone.

Oh, sorry?

At the moment—

Mm-hmm

... there's no, uh, there's no confirmed order from any hyperscaler to FTA.

Right. Right.

Am I right?

Right.

So even we have not entered into an initial stage of execution where there is a credible market report which would substantiate the claim that their execution capability is good, right?

Mm-hmm.

It would pretty much be happen-- will happen on hunch basis or, you know, trust basis in next terms, if the pressure will come to deploy these turbines to any hyperscaler.

Mm.

Then they have to trust the process. They have to accept the fact that if things will go south, then they have to be ready for that kind of repercussions. You understand what I mean to say? They have to be ready for the failure as well.

Right. But then in order for, um...

Like even before FTA actually makes a delivery to, uh, the hyperscalers so that they can prove its execution capability, um, hyperscalers, uh, can, like, um, evaluate some other criteria, uh, of FTA to, uh, confirm the level of, uh, like readiness, execution readiness of FTA. Such as like, um, according to FTA, they argue that they have, like, thousands of CFM56, uh, in their— Uh, inventory.

So, like, they have pretty much, um, ample amount of, like, CFM56.

So it is not just the availability of the inventory from turbine standpoint, right?

Mm-hmm. Mm-hmm.

What I told you earlier is their, you know, the initial point if you recall, what I told you is their, you know, conversion credibility as well.

Mm. Right.

The risk is, the risk is not the aircraft engine alone.

The risk is converting it into a stationary power product. Correct?

Mm-hmm.

With controls, generators, coupling, emission package, enclosures, cooling, fire system, fuel system, data center grade operating models, et cetera. And then they also have to showcase the balance of plant capability and packaging capability that hyperscalers need a complete power block, not only an engine, right?

Mm-hmm.

So the package must include generators, controls, protection, transformer, exhaust, and so forth, right? So it is not just having a half of the product available, but it's all about how you can solve the problem in an integrated holistic manner.

Mm-hmm.

Yeah.

And so far, um, regarding its, uh, technical ability regarding this conversion, um, how does FTA's, um, conversion ability, uh, compares against, uh, like other peers?

Um, that absolute answer may not be able to share with you. All right? Because of the confidentiality part. But I think, uh, uh, they are comparable.

Mm-hmm.

When I say comparable or their biggest advantage is, uh, is a speed to market narrative.

Mm-hmm.

They are mature CFM56 engine base. They have a modular twenty-five megawatt block size, and they're potentially faster availability than larger OEM turbines. They have existing aviation MRO capability and a strong fit for, you know, bridge power and phase VI campuses.

So in these areas, they are-- It seems to me they, they can gain the momentum or they are ahead. Correct?

Mm-hmm.

Certain areas where could be a risk, which will, you know, put a little challenge in their way is they are new entrant in the stationary power. They have limited operating references in data center duty. They have not done much of a data center projects.

They have not proven hyperscale service model. Their uncertainty around permitting and emissions, uh, customers' bankability concerns, which is very high, and need to prove full packed solution, not just engine conversion. So these are the areas where they still need to prove their capability.

Hmm. Hmm.

Like, um, in terms of delivering, uh, execution capability that you just mentioned, uh, like I'm, I'm curious, compared to six months ago, has FTA's sales message, like, changed, uh, somewhat? Like ha-have A- has FTA became more, more aggressive or more confident in their-

I, I don't know. I haven't followed, to be honest—

Mm-hmm

...uh, this particular thing more aggressively because at the moment in India, I don't think so this solution would be easily feasible to operate immediately. So, uh, from India perspective, if you ask me, we haven't followed it very aggressively. So I don't have much of a, you know, visibility around it.

Hmm. I see. Uh, okay. Hmm.

Hello.

Um, then, um, um, since you began tracking FTA around late last year, uh, has your confidence on FTA, um, increased, or decreased, or remained unchanged?

Uh, I think I answered this. So— Uh, the confidence is very subjective, you know?

Mm-hmm.

Because there are certain bottlenecks which are under FTA control.

There are certain bottlenecks which are partially under their control and mostly-- and some things which are beyond their control. For example, gas pipeline availability, site permits, air emission approvals, grid interconnection rules, local community opposition, customer-facing approvals, utility coordinations. So these things, uh, are still open, right? Completely.

Then areas where they have partial control, I would say engine sourcing, generator supply, exhaust emission packages, transformer and switchgear integration, and EPC partner network. So all these things are partially under control, which is also, you know-- which also, you know, sometime doubt or put, put a pressure on the confidence level as well.

So unless these areas are fully checked, I would still say there would be a fair amount of, you know, challenge towards trusting this solution completely by any hyperscaler.

Um, so you're saying that unless, um, FTA overcomes those bottlenecks, uh, hyperscalers would, uh, concern about FTA's-

Hundred percent.

Um, sorry?

Hundred, hundred percent. Hundred percent.

Uh, and can you elaborate more detail regarding those bottlenecks that, uh, like you concern the most and which factors that are under FTA's, uh, control can, uh, can improve easily?

Yeah. So under FTA control, I would say packaging design is under their control. Correct? They can do the designing of the packaging is area and process.

Their production process is under their control because it's their baby. Then generator integration is something which is under their control. Uh, controls and protection system, they can develop with the help of their partners. They can develop their service network. They can, you know, develop their spare engine strategy. They can develop their warranty model.

They can develop their quality assurance and field commissioning process. So these areas where they can directly start working and they can build more confidence and give more confidence to the customer. The areas where they will not have a direct control are engine sourcing, generator supply, emission packaging, exhaust emission packaging, you know, transformer and switchgear integration, EPC partner network.

And then most of the thing which is outside their control could be gas line connectivity, site permits, air emissions approvals, grid interconnection rules, local community oppositions, customer financing approvals and utility coordination.

And, and which bottlenecks, uh, do you concern the most?

See, even though the things which are under control are not solved at the moment.

You understand what I mean to say?

Uh.

For example. Yeah.

Right.

So what I'm trying to say is the points which could be under their control are still open to be proved. So those are the primary ar-areas where they should focus first.

So what you're saying is that, um, you are not quite confident on FTA, um, showing some improvements on the bottlenecks that are currently under FTA's control?

Um, to be honest, haven't heard much on this particular vendor a lot internally.

What? You mean, you mean FTA?

Yeah.

But you just mentioned that, um, Microsoft is evaluating and-Um-

I don't-

Concluded this first stage evaluation.

What I told you that initially when this whole discussion started some six months back, right? That time the evolution process started.

We get to know on time to time basis at what stage it is. But we don't actively follow from India perspective. So, you know, the controls or the kind of, you know, requirement we don't have at the moment in our country.

Oh. But wh-when I asked, uh, on the screening questions, uh, I remember that you are aware of, uh, the decision-making with-

Yeah, I'm aware of. I'm aware of-

Mm-hmm

...this thing. I think we are not evaluating them from India perspective. So on certain steps I may not be included or I may not be informed.

But you are aware of, right?

Yeah, yeah, yeah.

Yeah. So can you share, um, those, uh, perspective that you, oh, are aware of regarding the decision-making pro-- uh, process and the whole perspective changes happening on FTA?

So there's not much of a change which we discussed, right, in the last forty, forty-five minutes. What I told you is there's still... evaluation is underway, right? Since this is a new tech- new technology, not proven a lot in the market yet. So there is a segment of people who are interested to have this thing on board, but then most of the people having it shown, you know, doubt on the success rate.

So that is where the conflict happens most of the time in organization, right? So what is happening at the moment? Since power is the new driver for any data center growth, so companies are open to evaluate all alternative methods for power generation distribution. But then if any new entrant is coming and wanted to be the partner, they have to prove their capability first, right?

Then, um, mm.

Yeah, just wanted to do the timekeeping. I have a hard stop in next five minutes.

Yes. Um, are there any other comments that you would like to add on regarding FTA?

See, I think, uh, they have a very strong potential to be the leader in this segment, honestly. They're very strong, which I told you, right?

Their capability to speed to market, their mature engine base, the capability for modularization, potential faster availability than large OEM turbine makers. What they have to work upon is since they are a new entrant in stationary power with limited operating references in data center duty and unproven hyperscale service models, they have to create a deal with, with one of the hyperscaler to enter into this game.

Then only their future progress would be more promising.

Yes. A-and I would like to hear some rationales behind your, like, comments that FTA's, uh, future, uh, looks promising.

So my rationale behind, behind their fu-- uh, behind their, you know, positive future is because technically they're very strong. They have a very mature engine base.

They have a very strong modular twenty-five megawatt block size. They have their existing MRO capability. They can potentially provide faster, you know, turbines than any other OEMs. And, you know, uh, their speed to market narrative is very strong. I think that's a, you know, key rationale behind, you know, I'm very hopeful that they will do good in the market in coming time.

Mm. I see.

Uh, thank you. So you're not actually involved in, um, like the actual evaluation and the discussion, uh, table with FTA, right?

So when it comes to technical part, right?

Mm-hmm.

Me and my team, we provide technical assessment. Okay? When it comes to commercial-

Huh? Sorry.

When it come-- commercial discussions-

Mm-hmm.

...there are different team members to participate in the commercial aspect of it.

Uh, by meaning commercial, you are saying, uh, like giving the actual orders, or?

Evaluating their cost.

Ah.

Yeah.

Mm. And when evaluating the technical aspect of FTA, um, how does that process actually work? Because, um, in order for you to evaluate it in a technical perspective, you need to actually, uh, see and test its engine, like physically, right?

Yeah. Yeah. Yeah. You're right.

Then if... Then-

So what happens, you know, there is a concept, there's a term called factory acceptance test and site acceptance test.

Uh-huh.

Okay?

Unless you have deployed anything on site, you will try to prove the engine capability at your factory. Okay? You will run the engine, you will show the performance, this, that, blah, blah, so many things. People go visit, audit, review the performance, come back, understand the, you know, the assumption level, performance level, and then they will submit the report back to the leadership team.

Yeah. Uh, I think we have run over the call time. Uh, is it okay if we end the call now and-

Okay. Okay. Sure.

...we connect on any other feasible time? Sorry, I have another call to catch up.

Okay. Thank you so- thank you so much.

Thank you. I hope, uh, this conversation was helpful.

Oh, yes. Bye.

Thank you so much. Bye. [phone dings]