Can Green Charge kick-start energy storage leasing boom?

A $US56 million fundraising round by US energy storage start-up Green Charge Networks is causing a stir in the industry, with the vote of confidence in the company’s innovative “shared savings” leasing model tipped to signal a boom in market growth to match that of residential solar.

Founded in 2009, the California-based Green Charge Networks specialises in customer-sited energy storage, and has recently moved towards a business model enabling commercial and residential customers to install its proprietary GreenStation technology at no upfront cost.

This week’s successful funding round – a record amount raised by any company in the intelligent energy storage space – led by K Road DG, – will mostly be used to finance storage systems, for deployment via Green Charge’s Power Efficiency AgreementSM (PEASM).

Not unlike a Power Purchase Agreement (PPA) for solar, the PEASM shifts the performance burden from the customer onto Green Charge, as the asset owner. Under a PEASM, GCN installs, owns, operates, and maintains the GreenStation equipment at the host location, in return receiving a share of the energy bill savings at the customer site.

It’s a financing model that, through companies like SolarCity, has been key to the spread of distributed solar; but which has, until now, been unavailable in the energy storage space. And, of course, the technology is particularly compatible with solar, electric vehicle chargers, and energy efficiency measures.

For Green Charge, the $US56 million injection of funds will mean that its GreenStation technology – already successfully installed by the likes of 7-Eleven, Walgreens, UPS, and school campuses – can now offer a huge variety of potential customers throughout the US a powerful combination of utility bill savings, zero capital and maintenance costs, and mitigated performance risk.

According to market research firm IHS, the energy storage market is expected to grow to an annual installation rate of over 40GW by 2022 — from only 0.34 GW in 2012 and 2013. The US is predicted to be the largest market for grid-connected energy storage.

According to Greentech Media’s Eric Weshoff, the key to Green Charge’s innovation lies in its software, which operates the battery and electronics and models customer usage in the context of utility rate structures.

“What’s really driving the first wave of building battery systems are demand charges,” says Weshoff – “the portions of utility bills that building owners pay when their total electricity consumption hits or exceeds certain thresholds at any moment in time.

“Because these ‘peaks’ are hard to monitor or predict, they’re hard to prevent – and in certain markets, like California or New York, they can add up to a significant portion of overall utility bills.”

So it is no coincidence that Green Charge’s two main offices are in the two coastal states, with estimates that rising electricity prices are costing many businesses and institutions 50 per cent or more of their electricity bills in demand charges.

According to reports, a California state college saved $120,000 in demand charges alone in the first year of using the Green Charge system. Under the shared-savings model, the college keeps 25 percent of that $120,000.

“Power efficiency is the next frontier in energy savings,” said the company’s CEO, Vic Shao. “We plan to leverage the alliance and financing from K Road DG to scale our company’s deployments and continue our customer-centric innovations.”

William Kriegel, CEO of K Road DG, says it is his company’s belief that Green Charge’s technology and business model “respond directly to a global demand for intelligent energy storage.”