Microgrid startup Go Electric secured a rare cleantech hardware exit when acquired by battery maker Saft this week.
The Indiana-based startup builds a compact microgrid controller, promising seamless backup power and integration with many types of energy devices. It made a name for itself when it met the Pentagon's high bar for durable grid infrastructure, and has delivered four microgrid controllers to military bases and won contracts for three mobile systems.
Go Electric also branched into the commercial and industrial market in late 2017, chasing customers with resilience needs that could benefit from localized energy control, though that market has been slower to develop than its military applications.
The working relationship between acquirer and acquiree goes back three years, Go Electric CEO Lisa Laughner said in an interview at Greentech Media's Grid Edge Innovation Summit this week.
Saft, the century-old manufacturer acquired by French energy major Total in 2016 for more than $1 billion, supplied batteries to Go Electric. Saft operates several factories in the U.S., including a 235,000 square-foot facility in Jacksonville, Florida, making its products compliant with the Buy American Act that governs federal procurements.
"Having Saft as our owner now gets rid of the startup stigma," Laughner said. "Customers that might have been a little bit leery working with a startup company now don't have to worry about that, because we've got the balance sheet of Saft — and Total, for that matter."
The deal also expands Saft's scope of operations in the grid edge market. Instead of just supplying batteries, like it did recently for a remote microgrid in an Alaskan salmon-fishing community, Saft can now sell power electronics and microgrid controls alongside its core product.
"This is right in line with what Total's competitors are doing, getting into the C&I space and getting one more piece of that value chain," said Elta Kolo, research manager for grid edge at Wood Mackenzie Power & Renewables.
For Go Electric, the new owner's manufacturing expertise offers a credible pathway to scale from building a handful of products per year to hundreds. The startup had focused on the U.S. market, but Saft's global presence will allow international expansion "really fast," Laughner said.
Born in Indiana
Go Electric was founded in 2011 in Anderson, Indiana, and has grown to 34 employees. It raised roughly $10 million prior to the acquisition, including a $4 million Series A in 2016 and a 2017 mezzanine round of $4 million in debt from WindSail Capital. Outside investors included Chicago-based Clean Energy Trust, Evergy Ventures, Indiana-centric Elevate Ventures and Elemental Excelerator.
The parties did not disclose the buying price, but Laughner said "it was a nice exit for all the stakeholders," and that employees had their options paid out.
This marks Elemental's tenth exit, and the fourth exit for Clean Energy Trust, a nonprofit which operates an evergreen fund that made the first outside investment in Go Electric and has advised the company every since.
"Lisa had the persona of an entrepreneur who could be successful and fight through the obstacles and challenges that inevitably were going to be in her way," said CET CEO Erik Birkerts, on the sidelines at the Grid Edge summit.
Go Electric will keep its name and whimsical Segoe Print font logo, while taking on the mantle of Saft's Microgrid Center of Excellence. The acquisition stipulates that the founders will stay on for at least three years, and that operations will continue in Anderson during that time.
Go Electric makes two core products. The standardized microgrid controller can manage a smaller number of energy resources, like solar PV, diesel generators and batteries, while providing backup power within 40 milliseconds, before devices shut down. The company has delivered controllers for up to 1 megawatt of capacity.
The switchgear product features the same power electronics IP, but can connect many more energy assets, providing each one with its own breaker to isolate faults and allow greater control.
The instant backup feature puts Go Electric into competition with conventional UPS devices, which keep critical loads on until backup generators kick in. UPS, though, only serves that one role, whereas Go Electric's controller performs other activities, like peak shaving or managing renewable generation, Laughner noted.
Tough going in commercial microgrids
For the commercial segment, Go Electric offers no-money-down energy as a service where other revenue streams are available, such as utility demand response contracts. If a customer wants to pay for resiliency, it can buy with cash or lease options.
The target market includes large manufacturers that stand to lose if production suddenly halts.
"Resiliency makes sense to them when it costs them a lot of money when the grid goes out," Laughner said. "Not all customers are willing to pay for resiliency."
The only completed C&I contract Go Electric disclosed to GTM is with Hawaii's Emergency Management Agency. The company first talked to GTM about its C&I aspirations in December 2017, a timeline which points to how hard it is to sell microgrids to commercial customers.
Part of the difficulty in this market is that microgrids often require bespoke design and financing, but Go Electric deviates from the norm in providing a standardized offering, Kolo noted. Small-scale production and high performance technology make it hard to offer low prices, however.
Building a strong commercial business also requires staffing up for sales and supporting customer operations after systems get installed, CET's Birkerts said.
"Now they have the resources of Saft, the salesforce and the infrastructure, to really go after the C&I sector a lot more aggressively," he explained.
The military can afford higher priced options for critical operations than the C&I market can support. If Saft's ownership can deliver economies of scale and bring down costs, Kolo added, it could help Go Electric finally reach a mass market.