2019 New Investment Spotlight #1: Nikola Power
Clean Energy Trust added four new cleantech startups to our portfolio over the past few months and unveiled them at Co_Invest Cleantech on May 22nd. Over the next few weeks we’ll be sharing some thoughts on why we invested in each one and what we’re excited about. This is the first edition of our 2019 New Investment Spotlight, and it’s shining bright on Nikola Power.
Batteries shall set you free… but when?
I was bullish on batteries in 2014. After all, they say energy storage is the holy grail of the clean energy economy. Or as Katherine Hamilton from The Energy Gang says, “Batteries are like bacon — they make everything better!” It’s true, batteries offer tremendous value in addressing the intermittency of renewables and creating a more resilient grid, not to mention unlocking electric mobility. But the battery industry hasn’t taken off quite as rapidly over the past five years as I had anticipated. At least… not yet.
Timing the market
Lithium-ion battery prices have continued to drop over the past five years, but it was only in 2018 that the per-kilowatt-hour price finally dropped below $200. And that’s a price that allows storage projects in some areas to really pencil out and offer customers significant savings. In California, storage installations have been doubling or tripling over the past three years and the number of solar plus storage projects is growing faster than solar-only projects. The economics will drive market adoption, and today, I believe, we are at a tipping point for the energy storage industry.
Not so fast
Despite falling costs, the storage industry is still not without its challenges. Operating a proper behind-the-meter battery energy storage system (BESS) is not as simple as slapping some solar panels on a roof, connecting a few battery packs, and flipping the switch. Local rate structures and the building’s load profile must be taken into consideration to correctly size a BESS (bigger is not always better). Further, solar developers are seeing opportunities to add storage to their existing solar projects, but many don’t know where to start and how to get it financed. And once a BESS has been deployed, an energy management system (EMS) is needed to control the batteries’ charge and discharge cycles to optimize the economics, stability, longevity, and safety of the system.
Enter Nikola Power
Based in Denver, CO, Nikola Power offers an end-to-end solution for storage developers to easily deploy battery storage projects. The Nikola solution provides two software products as well as project capital to finance their customers’ systems. The first software product — Ratio — is an analytical tool that sizes the system and forecasts savings. The second tool is Intellect, the EMS platform that controls the BESS. While Ratio will initially be a free offering for their customers to leverage during project origination and development, Intellect will be sold as a subscription service to monitor and control the system throughout the life of the asset. Combining these software products with a financing option is a business model we’ve never seen before — one that we feel removes significant friction from the process of deploying storage projects.
This isn’t their first rodeo
To build a scalable, impactful business you need a great product that solves a real customer pain point, but that’s not enough. You need the right team in place, and Nikola has it. The core team has over 20 years of experience developing and financing renewable energy projects. The co-founder and CEO, J.W. Postal, already has one cleantech startup under his belt. He founded Main Street Power which was acquired by AES in 2016. More importantly, because they’ve been in this industry, they really know the customer — they were the customer.
There’s a lot to be excited about
We think Nikola Power is well positioned to capitalize on a fast-growing energy storage market. Timing the market is critical and now is the right time to move. Their unique business model coupling software with project capital solves a real pain point for solar+storage developers. And the team brings the perfect combination of experience, skill, and passion to execute on their vision to make energy storage solutions simple and smart.
Look for Nikola Power at SPI!
Say hi to the team at Solar Power International in Salt Lake City, September 23–26, where you can test drive the latest version of their software.
Interested in investing?
Reach out to Paul Seidler (paul@cleanenergytrust.org) to learn more about Nikola Power’s current funding round.
This is the first in a series of posts on CET’s recent investments — click here for the next post
