RWE Supply & Trading, the energy trading arm of Germany-based RWE Group, recently purchased a strong position in Stem, Inc, and will have a seat on Stem’s board of directors, This prompted me to send the California company a series of questions, designed to find out why RWE picked Stem’s energy storage.
RH: There are many companies working on peak shaving & storage. What makes Stem’s system special?
Stem: While demand charge mitigation will continue to be a major draw for businesses, our goal is to build a forward-thinking grid resource that goes above and beyond traditional peak load shaving to benefit both customers and grid operators. By aggregating Stem’s fleet of intelligent energy storage sites, Stem can deliver grid services at a grid scale. Our intelligent storage solution is driven by a best-in-class software platform, which features predictive algorithms that learn each customer’s energy profile over time to help balance on-site customer needs with services for grid operators. Stem is also uniquely working with second-by-second data, versus the 15-minute blocks more commonly utilized in this industry. The robust datasets we can compile enable Stem to automatically maximize customers’ electricity bill savings while simultaneously acting as a rapid and precise asset for grid operators, when and where they need it most.
To this end, Stem is the only energy storage player actively participating in the California Independent System Operator (CAISO) day-ahead and real-time markets. Stem aggregates the excess capacities of several customer-sited systems and bids those assets into the CAISO market. Upon procurement, payment from CAISO is passed back to our customers, creating an effortless new revenue stream for these businesses.
In addition to our technical capabilities, Stem has also built the largest project finance pool in the industry—$135M and counting. For our customers, this means we can turn an upfront investment decision into a monthly savings discussion. Our systems are supported by 10-year warrantees and savings guarantees, which takes even more risk out of the equation.
Q: How long can your system store energy before having to release it? (minutes? hours?)
Stem: Today, Stem uses lithium-ion batteries provided by some of the world’s leading battery suppliers. With this caliber of technology and chemistry, the charge can be held for significant periods of time (years rather than minutes or hours) with negligible loss. That being said, with the use of Stem’s predictive software, Stem can accurately predict where and when stored energy is needed and charge based on operational and economic efficiencies.
Stem’s monthly leasing program
Q: One of the case studies on your site was for ShoEi foods, which expects to save $72,000 a year using your software & storage. But: (a) how long did it take them to pay off the equipment & software? (b) Are there other benefits to using your system (like increased efficiency, less wear & tear or lower maintenance costs)?
Stem: Our customers benefit from Stem’s monthly leasing program. ShoEi was able to see savings from its system from day one, so this becomes a monthly savings conversation rather than a payback conversation. The annual savings figure factors in the lease cost. (This is the same for all other savings mentioned in Stem case studies.)
At ShoEi Foods, Stem’s intelligent storage system was paired with the facility’s pre-existing solar energy installation, allowing the company to qualify for a more cost-effective rate plan from its local utility. Our software platform also helped the team at ShoEi to easily identify the impacts of specific equipment on monthly electricity bills and make simple operational adjustments to minimize its usage spikes throughout the day.
Q: Help me understand the significance of this deal better. What does RWE gain, in terms of technology or global reach, by obtaining an interest in Stem?
Stem: RWE’s relationship with Stem goes beyond financial investment. The company earned a seat on Stem’s advisory board to more closely guide our strategic expansion into new markets in the United States and internationally. For RWE, Stem brings unparalleled leadership on how advanced, proven storage solutions can improve the operations of both utilities and their customers. As distributed resources continue to play a more prominent role on grids around the world, RWE recognizes the importance of understanding the technologies and applications in this emerging space.
RWE joins an already exceptional group of investors including Mitsui & Co., Total Energy Ventures, Constellation New Energy, Iberdrola, and GE Ventures—all of which have provided invaluable insights as we look toward the next phase of our growth.
Q: Could this lead to technological exchanges, whereby Stem is used in Europe or European technology is introduced to the United States?
Stem: Over the past year, we have noted a significant uptick in interest from international markets as they begin to see the value of distributed storage. The technology applications are easily replicated in different markets so it is reasonable to believe that intelligent storage companies will span countries and continents as more markets become economically feasible. Energy storage is capable of making a positive impact for energy distributors and consumers around the world. At Stem, we have no doubt that energy storage will be commonplace technology across the globe.
Photo Credits: All photos courtesy Stem
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