AMS to start series B fund hunt this month

Advanced Microgrid Solutions is on the hunt for new investors after growing its business using batteries supplied by Tesla. Pic: Tesla Motors.

Advanced Microgrid Solutions is on the hunt for new investors after growing its business using batteries supplied by Tesla. Pic: Tesla Motors.

By Jason Deign

Advanced Microgrid Solutions (AMS) of San Francisco, USA, is readying for a new fundraising round that could kick off as early as this month.

The much-hyped project developer is looking to bring in more than the USD$18m it achieved in its last financing effort, which closed just under a year ago.

“We are about to launch our series B and that will be concluded this year,” chief commercial officer Katherine Ryzhaya told Energy Storage Report.

The money will be used to speed up the growth of the company, which currently has 2.5MWh of storage in operation and aims to have installed more than 5MW and 3.5MWh by the end of this year, according to Ryzhaya.

“With the series B we will only be scratching the surface of the opportunity within the US,” she said. “We also have customers with a focus on the UK and Japan.”

A well-connected executive team

A well-connected executive team has helped AMS garner considerable success since it appeared on the energy storage scene in November 2014 with a contract for 50MW of projects for Southern California Edison (SCE).

The deal, surprising for a firm with no track record, was likely influenced by the fact that co-founder Jackalyne Pfannenstiel was a former chair of the California Energy Commission and the first woman officer at Pacific Gas and Electric.

Meanwhile CEO Susan Kennedy’s former role as chief of staff to California Governor Arnold Schwarzenegger almost certainly helped in getting the actor-turned-politician on board as an investor in series A funding last year.

The financing was led by venture capital firm DBL Partners, whose managing partner, Nancy Pfund, joined the AMS board of directors in May 2015.

Pfund was an early investor and ‘board observer’ at Tesla Motors for four years up until the company’s stock exchange launch in 2010.

Tesla Powerpack batteries for projects

Unsurprisingly, AMS has chosen Tesla Powerpack batteries for its projects, although Ryzhaya insisted there were good reasons for this.

“When we won our contract with SCE we held an RFP [request for proposals] for technology and Tesla came out head and shoulders above, not only on price but also technology,” she said.

The fact that the brand is well known is another potential bonus, she noted. “Customers are interested in having Tesla on site.”

AMS has an agreement to purchase up to 500MWh of battery storage from Tesla.

Part of this was due to go towards the deal with SCE, although Energy Storage Report understands deployment may have been delayed by the bankruptcy of AMS’s funding and delivery partner, the ill-fated solar company SunEdison.

Storage installations will still go ahead

In any case, said Ryzhaya, the storage installations will still go ahead. “The 50MW is our SCE contract,” she said. “We’re now working with private finance. We’re not affected by [SunEdison].”

One of the projects originally announced in conjunction with SunEdison was a deal to install up to 10MW of reserve capacity spread across 24 office buildings owned by the Irvine Company, a California real estate firm.

It is not known how many of these installations have been completed, but since then AMS has announced a number of other projects.

Last month, for example, the company trumpeted “the largest advanced storage project at an educational institution in the nation,” in the form of a 1MW, 6MWh installation at the Long Beach campus of California State University (CSU).

The project was due to be followed by similar-sized installations at the CSU’s Office of the Chancellor and Dominguez Hills campus.

Standardised contract and offering

“Additional CSU campuses will be able to enrol in the advanced energy storage project through a standardised contract and offering,” AMS said.

Just four days after the CSU announcement, AMS said it would be installing a 500kW, 1MWh Tesla Powerpack-based storage system at One Maritime Plaza, a San Francisco skyscraper owned by Morgan Stanley Real Estate.

The project is expected to be completed by January 2018 and should cut the building’s peak energy demand by up to 20%, said AMS.

All these installations are for what AMS calls ‘hybrid electric buildings’, which essentially seems to be in-house jargon for commercial and industrial-scale storage with a high level of automation.

In hybrid electric buildings, said Ryzhaya, batteries are charged overnight when energy is up to 20% cheaper and less carbon-intensive.

Without interruption to building power supplies

Software then allows aggregated battery systems to be discharged by the local utility whenever it needs to shave peak loads, without any interruption to building power supplies.

Building owners benefit from lower electricity bills, because when peaks are highest they are feeding energy into the grid rather than consuming it, and also get paid a rental fee by AMS for providing space for the batteries.

AMS, meanwhile, gets money from the utility for providing demand response services and also bills each building owner a service charge, although Ryzhaya said owners always had a net gain from the deal.

“The building owner is always making money,” she said. “We have a financial performance guarantee so even if the equipment does not work they still get a cheque in the post.”

AMS believes the model is unique and has even registered the phrase ‘hybrid electric buildings’.

However, it sounds a lot like the approach being taken by a number of other behind-the-meter energy storage players, including Demand Energy and Stem.

If that’s the case, then it’s no wonder AMS is on the lookout for cash; it needs to get to investors before its competitors eat its lunch.

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