Geli — Software making energy storage a reality

Over $2.8 billion of VC dollars has poured into energy storage systems (ESS) over the past six and half years. Yet only in 2015 did the industry finally ramp up into an exponential growth trend. Why? Besides technological improvement and growing economies of scale, the major linchpin responsible in unlocking the full value of ESS has only just begun to develop. Growth Energy Labs Inc. (Geli) is one San Francisco based early-stage startup (post-Series A) that has built the key software enabling the new ESS renaissance. Here is why they are a cleantech company to bet on.

Source: Geli.net

1. Unbeatable value proposition

Almost all focus in the energy storage community has been historically placed on reducing costs while little focus has been placed on increasing value. Battery developers, utilities, commercial/industrial enterprises, and even residential users have assumed that different batteries should be used and designed for different use-cases, likening them to the one-trick-pony the battery in your phone plays. In reality we are discovering that ESS can have more than one use-case and be much more dynamic with good software.

Geli is one venture successfully turning this conventional thinking on its head with its advanced software. The venture is demonstrating that multiple value streams and services can be “stacked” and combined for different behind-the-meter (residential and commercial) and front-of-the-meter (utilities and ISO) applications. The result is that they are offering an almost instantaneous increased margin profile to any energy storage system and shrinking the gap between system costs and revenue (see figure below).

Source: “Levelized Cost of Storage Analysis 1.0,” Lazard, November 2015

What is benefit stacking likely worth? A lot. Rocky Mountain Institute estimated in their “Economics of Battery Energy Storage” report that 1) over $200,000 in net present value (NPV) could be added to ESS in commercial building applications; 2) almost $100 million in NPV could be added to ESS in ISO support applications; 3) over $6,000 in NPV could be added to ESS in individual residential homes with and without solar. Though these are just estimates they point to real value creation.

Plus as battery costs continue to decline and more renewables continue to be integrated into the grid and new policies support different types of ESS revenue generation, the overall prospect for Geli goes up. Given all these factors are to continue their current trends, Geli’s future prospects are definitely bright. Their behind-the-meter focus can technically stack the most benefits and value streams (13 total) so their value proposition a no-brainer to everyone in the fast growing ESS market.

2. Exploding market for DERMS

Geli is like a speck in the pond of the ESS market. Navigant Research estimates that internationally the market is expected to be $34 billion in annual revenue by 2023. In the U.S. alone the market has ballooned 222% from $134 to $432 million between 2014 and 2015. GTM Research expects it become a billion dollar market by 2018 and continue pressing a 34% CAGR to 2020. GTM projects a $10 billion opportunity for distributed energy resource management software (DERMS) like Geli’s solution.

Geli may be a speck in these numbers given its recent $7 million Series A raise in April but it is not poised to remain a speck for long. The pond is growing quickly and the Geli platform could not be more all encompassing to grow proportionally with it. Why? The Geli platform addresses:

  1. residential, commercial, and some utility applications — the full spectrum of behind- and in front-of-the-meter use cases (more focus on behind);
  2. project developers, owners/operators, and equipment suppliers — the full spectrum of value chain players;
  3. lithium ion batteries, flow, lead acid, and others — the full spectrum of energy storage technologies; and
  4. completely autonomous, semi-autonomous, and fully grid-connected systems— the full spectrum of microgrid and regular grid systems

Essentially the only factor limiting their TAM is the value add of DERMS on complete ESS’s, which is likely to maintain around 30%. Therefore the sky and the extent to which the ESS can grow is the limit to how big Geli can become. With a strong business development strategy the startup can easily grow to capture a substantial portion of the U.S. DERMS market, and render GTM forecasts as underestimates. They are poised to do just that with their sophisticated team and product.

3. Highly technical team and product

There is a reason that not many companies do what Geli does. They are not building any simple app but an “internet of energy” for ESS, similar to what Android or Apple OS is for regular computer and smartphone hardware. They are an outlier amongst typical consumer and enterprise technology companies in silicon valley because they are building a new platform for developers to make new kinds of apps. This overarching solution is much more complex than building any regular app and requires a deeply technical team. They have such a team.

Geli is led and inspired by co-founders Ryan Wartena and Crispell Wagner, and by CEO Dan Loflin. The idea is largely the brain child of Wartena, a Georgia Tech PhD and MIT Postdoc, who “got the direction from observing trees, and recognizing that nature builds an energy system beautifully.” Wartena dreams of a world running entirely on renewables and “thousands of little businesses owning and operating micro-utilities with energy storage systems.” It is not surprising that he and the Geli team are one of the first behind-the-meter wholesale energy platforms. They are stacked.

Geli currently has 34 employees listed on LinkedIn and over half have technical backgrounds, or are engineers or data scientists. The team is technical, talented, and battle hardened.

ARPA-E (the governments energy version of DARPA) recently had the Geli team test its “internet of energy” on 100 different devices ranging from batteries to electric vehicles to lights in order to show that they can all be synchronized and used for two competing applications (supporting the local utility and also serve as a regulating reserve for grid operators). This was by no means a simple big data task. It was a cutting-edge demonstration showing that a world full of microgrids and ESS is entirely possible and within reach. If there is any team up to the challenge of creating a microgrid future and an all encompasing internet of energy, it is without a doubt the Geli team.

4. An ecosystem approach

Being an all encompassing solution Geli has set itself up for widespread adoption through various ways. For one the company has a range of complementary customers and partnerships. By selling to 1) hardware-agnostic developers, 2) turnkey-focused owners/operators, and 3) OEMs who want a standardized product and access to operating data, they can in turn resell solutions amongst the others make substnatial business.

A good example of this is in the recent partnership signed with Tabuchi Electric. The Japanese solar inverter company announced it will provide $300 million in financing for behind-the-meter solar plus storage loans and leases to stimulate sales of its products. They are using Geli as the exclusive DERMS and will provide Geli with exposure to many different developers who the small startup can in turn follow up with for business on future projects.

Another area where Geli is doubling up is with its strategic partnership with Shell Technology Ventures (STV). The corporate venture arm of Royal Dutch Shell participated in Geli’s Series A round and provided the venture with both cash and a pipeline of sales. As “…one of the largest wholesale power marketers, both wholesale gas and electric, with a huge trading portfolio in the U.S,” the partnership alone could be worth up to $100 million in the next five years, although the immediate cash was probably most valuable.

Lastly Geli is positioned to be a leading internet of energy platform provider of the future because their focus is on the highest value services at the lowest cost of capital. By focusing on behind-the-meter applications (most benefit stacking and value add potential) and focusing only software offerings (most nimble and capital light) Geli can easily emerge as a leading platform provider. The rest of the ESS and DERMS industry has been somewhat haphazard with their approach to value add and cost so it is open for Geli to dominate (see figure below).

DERMS competitive landscape

Geli was named in the global cleantech 100 for a reason. Just as energy storage is hailed as the missing link for solar and wind, so is Geli’s software the missing link for energy storage. Who will win the battle for the ultimate internet of energy platform? Nobody knows, but given everything above and much more I would bet on Geli and a future internet of energy run predominantly by their software.