Two startups in the energy storage business spoke last week at the monthly Silicon Valley IEEE PV meeting. Although the two firms have vastly different approaches and technologies, the one thing they agreed on was that working with utilities was the slowest and least attractive path to market for an energy storage startup

Steve Bisset, the CEO of Terrajoule, a firm we profiled here, is going after off-grid or "bad-grid" applications in places like India as well as the U.S. irrigation market that burns $2 billion per year in diesel fuel. It's 24-hour distributed power – not a storage product per se, rather it’s power with storage, to access the big markets that lack the grid support needed by solar panels.  Instead of a tank of diesel and a diesel generator, the firm employs a concentrated solar power (CSP) trough plant to generate super-heated water at 100 psi, which is stored in a 30,000-gallon tank. The steam from the tank drives an efficient steam engine, which turns a shaft and spins a generator. The user gets distributed, dispatchable renewable energy with no diesel and no pollution.  The firm sees this as the way to take the daily blackout brakes off of economic growth in India.

No utility is involved.

Stem, another startup (formerly called Powergetics), sees itself as an energy optimization company that mates software, batteries, and power electronics in a new way. We profiled the firm here.

Again, at the moment -- no utility is involved. This is all on the customer side of the meter.

Stem is a "cloud-based energy optimization solution that reduces peak electrical usage, lowers electrical bills, and eliminates the need for new generation facilities," according to the company's maiden press release. The 30-employee company is armed with more than $10 million in VC funding from the Angeleno Group and Greener Capital. David Buzby, former chairman of the board of SunEdison, is also an investor.  

Brian Thompson, Founder and CEO of Stem, said that the company has created a storage system that can save the consumer energy and money without any behavioral changes or compromises for the business. "We are transforming the way people use electricity without changing what they do,” said Thompson, adding, "We're not thinking about energy arbitrage."

Utilizing a battery, advanced power electronics, and predictive analytics, the company's technology is able to make economic energy decisions on an hourly basis as an automated system that optimizes how customers pull power off the grid. Part of Stem's secret sauce is the power electronics needed to get AC into and out of a DC battery. "A big piece of our IP is our power electronics," said Thompson. The inverter, charger, and battery management system (BMS) have to form an integrated whole and "have to work together to do anything interesting."

The CEO stresses that "it's not energy efficiency; it's energy optimization," adding, "it can radically transform the economics of energy consumption in commercial businesses." Electricity continues to be one of the largest expenses for commercial businesses despite the proliferation of energy efficiency technologies.

Initial customers will be medium-sized commercial entities such as fast-food restaurants, retail chains, gas stations, and hotels.
The CEO said, "We're using the best value-driven battery we can find," adding, "It's effectively an electric vehicle battery, small and dense enough to fit in a commercial building. It's like parking an EV in your office." Initial technology uses lithium-ion chemistries. Typical EV batteries are in the 20 kilowatt-hour to 40 kilowatt-hour range, but the size of the application will determine the size of the battery, according to the CEO. Stem is not a battery maker and is technology-agnostic as to battery type. A number of Asian or American companies with battery technology, such as A123, Samsung, NEC, LG, Sony, and Mitsubishi, could be potential partners for Stem.

The goal is to optimize the battery in intelligent ways and make a business plan that is standalone without any incentives. The CEO said that the system works better for the customer in regions with complex rate plans, allowing the software-as-a-service (SaaS) product to provide more predictability for the customer (and perhaps the utility) and to help businesses become better grid citizens.

By using the cloud, said Thompson, "You can use adaptive analytics across different business and adapt to the specific business and vertical. The ability to adapt to the user is the secret weapon."

Thompson cited a large hotel in downtown San Francisco with a $500,000 annual utility bill. The hotel "threw a lot of money at lighting and customer behavior and brought their utility bills down to $350,000, and then ran out of things to do," according to the CEO. Stem's system, at a nominal cost to the hotel, provides for a "sub-three-year payback" according to the CEO and can trim another ten percent from that annual bill -- with no behavioral changes required on the part of customers or facilities managers.

This improvement comes from Stem's analytics platform and high-definition energy usage data. According to the CEO, Stem can predict a customer's energy demand profile within two or three percentage points. Chillers and lighting are predictable loads. Combined with billing plans, weather information, and other data, Stem's system moves energy in and out of the battery to maximize the value of electricity within the confines of the customer's rate plan.

Although the battery is getting quite a bit of exercise, Thompson claims that the battery cycle looks more like that of an electric vehicle rather than a device that is constantly being sent to full depth of discharge.

Stem's goal is to use smaller amounts of battery storage, but lots of smarts. Thompson said a typical lithium-ion system would occupy the space of "a couple of dorm-room fridges."

As mentioned, Stem is relatively agnostic about battery technology. Lithium-ion is the current choice, although the firm could use lead acid or eventually some of the emerging new battery chemistries.

"We are a software company," said the CEO. "We have a fundamental belief that every commercial building will have energy storage in it within 20 years." He added, "We aren't currently doing this with utilities. But we are doing it."

By the end of next year, the firm looks to have two megawatts deployed.

Many storage startups have focused on hardware, chemistry, and physics, looking to coax more energy or power from a material or device. Companies like Stem look to provide a battery platform combined with grid awareness and intelligence -- one that is less dependent on chemistry and more dependent on value to the customer.