Energy storage startup Powin Energy has raised more than $100 million in equity investment to compete with better-funded rivals in the large-scale grid battery market.

Powin buys battery cells and hooks them up with proprietary software controls and ancillary equipment to produce full-fledged power plants. It competes in the upper echelons of the energy storage integration market with the likes of Tesla, Fluence and Wärtsilä.

But those competitors are storage businesses nestled within billion-dollar, publicly traded enterprises. Powin is a bootstrapped company based amid the evergreens of Tualatin, Oregon that managed to build some 600 megawatt-hours of storage on its own. 

"By being a pure-play storage company, our customers know we’re not focused on anything else," CEO Geoff Brown told Greentech Media Thursday. "We want to build the world’s best batteries."

Now the U.S. storage market is poised to triple over last year's volume. Scaling to meet that demand requires money, which Powin secured with its $100 million equity investment announced Thursday. The round was led by private equity firm Trilantic Capital Management and joined by Energy Impact Partners, a utility-backed venture capital firm.

The investment ranks as one of the largest in a grid storage company; the top trophy in that category went to Fluence, with its $125 million investment from the Qatar Investment Authority just weeks ago.

The influx of cash comes at an opportune time. Powin is slated to install 2 gigawatt-hours of storage capacity in 2021, Brown said, which amounts to more than tripling its total installed capacity in the course of this year.

From humble roots

Powin launched in 2010 with funding from founder and Chairman Joseph Lu. It raised $12.5 million in 2014 from Shunfeng International Clean Energy, which also invested in solar company Suntech and other cleantech ventures. It raised another $15 million in mid-2020 from Houston-based Arroyo Energy Investors, which worked with Powin on a microgrid at a car factory in Mexico

With those limited funds, Powin had to prove to customers that it could be trusted to supply a piece of equipment that's supposed to last decades. Powin did not have the longevity of a legacy power company or the balance sheet of a major automaker to support its sales pitch.

At first, Powin developed its own projects, starting with a 2-megawatt/8-megawatt-hour battery installed as part of the Aliso Canyon procurement in Southern California. That project helped utility Southern California Edison meet its capacity needs after a major gas facility leak, and Powin also delivered frequency regulation services to the California grid.

Self-development gave Powin a chance to show customers a working product. In time, the company worked with more established partners to wrap the storage system and installation into a bankable package. Powin later sold its development pipeline to focus exclusively on supplying product to customers.

In 2018, when Plus Power was developing a battery for Arroyo's microgrid in Monterrey, Mexico, Powin filled the need with unusual swiftness, said Plus Power General Manager Brandon Keefe.

"These guys went from purchase order to completed system in 10 weeks," Keefe said. "Never been done before — or, I’m pretty sure, since."

One thing hasn't changed over the years: Powin has always used lithium-ferrous-phosphate, or LFP, battery chemistry. That chemistry delivers better fire safety and fuller depth of discharge than nickel-manganese-cobalt, or NMC, which is used by a majority of the world's grid batteries. LFP cells have historically been more expensive than NMC cells, but those costs have closed in recent years. 

Powin keeps its overall costs down by purchasing battery cells and designing the rest of the system, avoiding the costs of outsourcing battery modules or battery management systems. Buying commodity cells allows flexibility in sourcing as manufacturing methods improve over time or as geopolitics interfere with global trade.

"When we lower our cost with our vendors, we push all that savings back to our customer," said Senior Vice President Danny Lu. The goal, he added, is to combine "affordability and high value." That's a different tack than many storage companies, which talk about value as a preamble for justifying higher prices.

The startup has already outlasted some bigger competitors, including NEC Energy Solutions. The Japanese parent company of that respected storage integrator decided to abandon the business in 2020, despite propulsive growth in demand that has only accelerated since.

"Having a billion-dollar balance sheet doesn’t mean you’re going to be around forever," Brown said. "Fundamentals change at the parent company. There’s a hidden advantage to not being distracted by other priorities."

The Powin workforce grew last year to 120 employees in the U.S. and 56 overseas, and the company plans to hire 100 more staff members this year, with a focus on project execution.

Investment on the rise

Barely a month in, 2021 is already shaping up to be an investment bonanza for the storage sector.

Powin is the first energy storage investment for Trilantic, a private equity firm that invests in several industries. Prior energy investments typically focused on oil and gas plays, but it made energy transition bets on solar developer Intersect Power and electric vehicle charging company SemaConnect.

Trilantic had been looking for grid-related companies that needed assistance with scaling, execution and capital raises, the kinds of risks private equity is suited to help with, said Glenn Jacobson, a partner at the firm. For a while, he said, grid investment opportunities were bookended on one end by long-lived contracted assets promising single-digit returns, and on the other end by moonshot technology plays more suited to venture capital or research grants.

Then solar, wind and battery prices fell precipitously, and the energy storage market started to really take off. Companies that Trilantic considered investable started to come into focus.

"There is going to be dramatic, dramatic growth in this market," Jacobson said. "We wanted to get in the middle of the trend."

Rather than betting on a particular battery chemistry or on a particular business model for battery owner-operators, investing in Powin is a bet on "the lithium-ion value chain," he added. "It’s going to be a long time before competing battery technologies have anywhere near that kind of heft."

Trilantic brings experience helping growing companies with high-level business strategy and oversight. Energy Impact Partners brings a network of legacy utility backers, a valuable network as Powin seeks to connect with future customers. EIP also spends a lot of time tracking the needs of the grid ecosystem and can compare notes on those trends, said EIP partner Sameer Reddy.

"What they’ve done effectively on a bootstrapped basis is nothing short of phenomenal," he said of the Powin team. "We’re just providing a lot of fuel for the fire."