BY BEN COOK
- US-based Powin Energy grew 400% last year
- Revenue was $5m in 2018, but could hit $500m this year
- But supply chains are tricky, and shipping costs have soared
It’s been a monumental 12 months for Oregon-headquartered Powin Energy.
Nearly one year ago, the battery energy storage company announced it had sold a controlling interest in the company in return for “significant equity funding” from private equity fund Trilantic North America and investment platform Energy Impact Partners.
Since then, Powin Energy has boomed.
In a year in which Powin has expanded its international footprint with the installation of two new utility-scale battery energy storage systems in Taiwan and Israel – and also launched its new ‘Centipede’ platform – the company has grown a massive 400 per cent.
And the signs are that the company is only going to get bigger. It has high hopes for the Centipede platform, which it describes as “the company’s first fully modular design, complete with pre-integrated segments containing batteries, thermal management equipment, and essential safety systems”.
The company points out that, compared to previous generations of Powin’s ‘Stack’ products and smart enclosures, Centipede requires 50 per cent less time to procure and deploy and 30 per cent less space onsite, while also “reducing lifecycle costs and providing superior reliability”.
Centipede is expected to be a key driver of even more growth at the company in 2022, with revenue expected to hit approximately $500 million this year. To provide some context, revenue stood at just $5 million back in 2018, proving that the company has come a long way since it started out at the back of a trampoline warehouse outside Portland.
In the latest development, this week saw Powin announce it had selected Celestica to assemble Powin’s Centipede battery energy storage platform in Monterrey, Mexico in a move described as “a significant step in Powin’s plans to simplify and secure our supply chain for our North American customers”.
CEO Geoff Brown is the man at the helm. He oversees a 200-strong US-based Powin team, which has a pipeline of $700 million worth of projects.
In an engaging interview, Energy Storage Report asked Brown what distinguishes Powin from its rivals, what he sees as the biggest opportunities for the company and how Powin is tackling supply chain issues, which are among the biggest challenges the company faces.
What makes Powin different?
Geoff Brown: We took a fundamentally different approach from other integrators, based on the premise that the perfect battery hasn’t been built yet. There are going to be substantial changes and improvements in the way integrated systems are being delivered, so, from the very beginning, we decided we wanted to build in-house product engineering software/firmware capabilities.
Some storage companies are essentially white gloving systems, but we’ve taken on the engineering and hardware challenge to develop our own independent battery platform. I call it cell-to-system – we buy individual battery cells from various vendors around the world, and we build everything else on top of that to get to a fully integrated system.
I think if you cannot win large scale stationary storage from the most bankable and highest profile utilities then you’re not setting your bar high enough. And that’s what we’re doing. We want to win the largest projects. And that means we must have a product that’s in the top quartile from a quality and performance perspective and in the lowest quartile in terms of levelized cost of electricity. All our customers have extremely high expectations. They’re putting substantial amounts of their business in our hands and their own investments into their projects. We take that incredibly seriously.
Why do you think clients choose Powin?
GB: I think there are a few reasons why people go with Powin. Firstly, we are purely an energy storage company – we’re not also a car company or a multinational strategic, we’re not doing twelve different things. We do not think about anything else. Our investments, our acquisitions and our hiring are purely devoted to energy storage.
Secondly, on the overwhelming majority of our projects, we provide long-term service agreements for 20 years because a battery without active dispatch is an expensive paperweight. We also provide augmentation strategies – they need people like us on the other side of the table who are committed to maintaining, operating and expanding the platform over the next 20 years.
Thirdly, 35 per cent of our SG&A [selling, general and administrative expenses] is invested in research and development. We are a product and software company and we are constantly investing in the improvement of the capabilities of the platform.
What would you highlight as the most significant developments at Powin in the last year?
GB: In February last year we brought on Trilantic Capital Partners and Energy Impact Partners as our majority sponsors - they share our vision, our drive and belief in the market. They also share the drive to create the potential for grid-level transformation. When the pandemic started, we were around 45 people and now we’re 205. It’s a huge change, but there is so much more to do.
We have our Centipede Platform, which is incredibly exciting for us. These are outdoor-rated modular enclosures that require less time to procure and deploy, have superior reliability, require less space on site, and cost less to install.
We are also expanding our manufacturing presence from our China-based contract manufacturing to also include a North American manufacturing partnership with Celestica. Customers are responding really well to this because they see the value in North American-based manufacturing because it’s reducing logistics, supply chain and other delivery challenges.
What are currently the biggest opportunities for Powin?
GB: We already have a strong international presence. We’ve built some of the first battery projects in Israel. We’ve got some of the first projects in Taiwan. We also have projects coming online in European markets such as Spain and Portugal. We also have a substantial market presence in Mexico and Canada. But 80-90 per cent of our pipeline is in the US.
That said, our forecast is that, by 2025, close to half of our business will be international. I expect Southeast Asia is going to be extremely interesting, as well as MENA (Middle East and North Africa). We are seeing some large projects in the subcontinent in India as well as our partnerships in China.
What are the biggest challenges you face in the day-to-day running of your business?
GB: The first is supply chain – we went through a 400 per cent growth ramp during the century’s largest supply chain dislocation. So there have been challenges with integrated circuits and electronics components. And then there are shipping and logistics challenges. We’ve made massive changes in our logistics and transportation. Going into the pandemic, shipping was one-and-a-half percent of our total system cost. Now it’s 10 per cent.
Another challenge is the flip side of the opportunity, when you have a technology that is here at exactly the right time and the utility markets are awesome – if you are two cents too high, no one is interested. If you’re two cents too low, everybody wants to buy you. There’s a fulcrum where you can’t get any revenue and then it’s everything. The challenge is managing our own growth, managing the ramp up of everything involved in delivering a best-in-class experience to our customers.
What are biggest obstacles to the wider adoption of energy storage?
GB: The obstacles are broadly regulatory – there is a substantial education effort that’s needed. People have been running grids in a certain way for a very long period of time and now they just need to understand the potential of storage. This shift will really change the way they think about IRP [integrated resources planning] and planning for long term capacity. These aren’t trivial changes. They require changes to the underlying grid modelling software, their forecasting software, the way they deal with load pockets, and the way they look at T&D [transmission and distribution] upgrades. Those aren’t small things, so it’s going to take some time. The other big thing is we need a lot more batteries. I think projections for EV ownership by the end of the decade are roughly accurate to the point where investment in lithium-ion manufacturing and underlying raw material supply is going to be essential. We need to get to ten times the current manufacturing capacity by the end of the decade to meet EV as well as ESS demand.