BY JASON DEIGN:
The thermal storage player Ice Energy has confirmed imminent launch plans for Australia, Mexico and Saudi Arabia after securing new funding in June.
The company has already lined up a distributor in each of the territories, said Mike Hopkins, CEO, after talks with a global sales representative fell through.
“In the end we decided not to proceed with it because it was complicated,” he said. “We didn’t think it was the best in each of the countries. We’ve gone with the approach of looking for the very best partner in a country.”
Negotiations with the distributors are ongoing and Ice Energy hopes to confirm at least one of them before the end of the year, and possibly in September, Hopkins said.
The ice storage vendor is being approached by international distributors on a regular basis, he said. Ice Energy is keen to push on with global expansion plans following a major funding round earlier this summer.
Long-term funding agreement
The company entered into a long-term funding agreement with private equity manager Argo Infrastructure Partners, which kicked off with $40m in funding for Ice Energy and its current projects but could see much more committed.
The deal came about when Ice Energy found itself without a backer for its largest contract, which involved installing thousands of its Ice Bear units on behalf of Southern California Edison (SCE) in Orange County, USA.
The work was originally going to be funded by NRG Energy, which was also set to become the financing partner of choice for other large-scale Ice Energy contracts.
But in February the US energy giant announced it was pulling out of the renewables business, forcing Ice Energy to look for an alternative partner. “We wanted to find a permanent partner for everything that we do,” Hopkins said.
“The type that I was hoping for was not an energy company,” he said. “I believed that we had to a point where our projects could properly be considered as infrastructure.”
Fitting the bill perfectly
Argo, an infrastructure fund which manages about $3bn in investments, fitted the bill perfectly.
Under the terms of the strategic agreement, Argo becomes the equity owner of the commercial and industrial projects that Ice Energy develops, including the SCE plant.
Hopkins said he expected Argo to become a shareholder in Ice Energy at some point in the future. The June deal included a minor amount that went into Ice Energy to cover the purchase of the SCE project.
The $40m investment is just a first step in Ice Energy’s relationship with the financier, said Hopkins; he hopes that amount to grow to $100m or beyond.
More than 90% of Ice Energy’s revenues today are in the form of large-scale deployments for utilities, although the company is looking to build sales in the residential retail market from next year.
Corporate funding requirements
Nevertheless, Hopkins commented: “This deal looks after probably more than 90% of all of our project and our corporate funding requirements for the next two to three years. It puts us on a financial footing we have never had before.”
The funding should allow Ice Energy to reach profitability next year, he said, and will allow the company to sign deals with a financier already in place. Argo is also helping Ice Energy with business development in the US and globally.
One of the early fruits of this relationship is an introduction into Crow Holdings, a family-owned real estate investor, which has allowed Ice Energy to enter into talks with Trammel Crow, a US commercial buildings development giant.
Aside from this, Ice Energy is in negotiations with large utilities on providing thermal storage as a service. Such packages could even extend to the residential market, said Hopkins.
On the residential side, Ice Energy is in talks with air conditioning and solar installers. Hopkins said he hoped that residential revenues could rapidly equal those from commercial and industrial sales.
The residential product
“A year from now, you’re going to be hearing that the residential product was a great success,” he said.
Ice Energy’s residential product, the Ice Cub, will compete with traditional air conditioning systems and allow homeowners to control electricity use, reducing bills.
Finally, as previously reported in Energy Storage Report, Ice Energy is field-testing a refrigeration and process cooling product. “By the end of this year, we’ll be ready to launch it,” said Hopkins.
- Energy Storage Report is taking a short break. We’ll be back again in the middle of September.