November 23, 2015

Americas: Clean Energy: Energy Storage

Disruptive Cleantech Series Takeaways:
Primus Power

   Disruptive Cleantech: A focus on Energy Storage
We hosted an investor meeting on 11/20/ 2015 with
Tom Stepien, CEO of privately  held energy storage startup, Primus Power.
Our takeaways follow. 
Early stage opportunities abound – focus on energy
Primus is focused on three key end markets in the near-to-medium term:
(1) utility-scale, (2) commercial and industrial and (3) microgrids. Given its battery characteristics – 5 hours duration at rated power with 100% depth of discharge – Primus is squarely focused on larger-scale, long-duration applications for the grid, with peak shaving, renewable integration and bulk storage among key end markets that are estimated to reach $19bn by 2020. Primus sees Li-ion (which focuses on applications needing 2 or fewer hours’ duration) as an early leader in grid storage but expects Flow and other technologies (suitable for >2 hours) to capture the bulk of the market over time. Primus sees no economic basis for residential energy storage in US.

Targeting costs below Li-ion – scale and lower materials costs key
Primus is targeting costs in the $150/kWh range by 2020 (vs. ~$800/kWh today). Given long cycle times (tested to 30,000 cycles), the potential for a much lower levelized cost of storage (LCOS) appears to be high if Primus can achieve its costs targets. Primus’ 2020 target LCOS of <$0.02 per kWh is close to half of Li-ion’s 2020 target. Notably, Primus sees a 30%+ cost advantage in raw materials as its chemistry doesn’t require a separator and uses lower-cost electrodes and electrolytes vs. traditional Flow batteries – titanium vs. graphite, zinc-bromide vs. vanadium, respectively. 

Bankability and technology acceptance remain key near term
Beyond affordability, Primus noted bankability and technology acceptance are key hurdles for market development. On the former, Primus noted its technology is now being underwritten by one major financial institution with one additional lender also pending. On the latter, accelerated testing and pilot deployments appear to be in focus for prospective customers.

A snapshot of Primus Power – not your Father’s Flow battery
Primus’ proprietary zinc-bromide Flow battery employs only one tank of electrolyte solution and one pump (vs. two for others), a patented zinc electrode and no separator (which typically need to be replaced in 5-10 years for other Flow batteries) – together these lower footprint and lifetime cost.

Brian Lee, CFA      
(917) 343-3110 Goldman, Sachs & Co.
Hank Elder      
(212) 902-3099 Goldman, Sachs & Co.
The Goldman Sachs Group, Inc.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by nonUS affiliates are not registered/qualified as research analysts with FINRA in the U.S.  
  Global Investment Research

Company-specific regulatory disclosures 
The following disclosures relate to relationships between The Goldman Sachs Group, Inc.
(with its affiliates, "Goldman Sachs") and companies referred to in this research.
There are no company-specific disclosures.

There are no company-specific disclosures.
Primus Power is an energy storage company developing patented storage technology which pairs a unique zinc bromide chemistry with novel technical innovations to deliver optimum performance and multi-decade battery lifetime, at a low levelized cost of energy. Founded in 2009, the company is headquartered in Silicon Valley. Investors include Kleiner Perkins Caufield & Byers, DBL Investors, and Chrysalix, among others.

Chief Executive Officer
In 2009, Mr. Stepien helped launch Primus Power, which has since raised over $60 million from venture capitalists, government grants and strategic investors. He has 25+ years of engineering, operations, and general management experience at small and large companies. Prior to joining Primus, Mr. Stepien was a Vice President and General Manager at Applied Materials. He holds a BS and MS in Mechanical Engineering from MIT. 

The US electric grid is evolving. We expect a key driver to be the ability to reliably and cost-effectively store power – the one commodity that to date has not been stored. We see battery technology as key in this potentially seismic shift in how the grid operates. Within our coverage, SolarEdge (Buy, 11/20 close $18.27) and SolarCity (Neutral, $29.04) appear to have most leverage.

Global: Clean Energy: The Great Battery Race. October 18, 2015.
Americas: Clean Energy:
Energy Storage:
Disruptive Cleantech Series takeaways:

Aquion Energy. November 10, 2015

Disruptive Cleantech Group Lunch: Energy Storage with Sonnenbatterie – Tuesday, December 1 in NYC.