[AMS] This grid battery startup is raising funds to ramp up in a competitive market

Fortune.com
By Katie Fehrenbacher
May 27, 2015

Meet a young start­up with a huge util­i­ty deal and a lot of promise.

Tes­la is only the most well-known com­pa­ny that’s usinglow-cost bat­ter­ies and soft­ware to poten­tial­ly change how the pow­er grid oper­ates. There are a half dozen oth­ers, and one of those is a start­up called Advanced Micro­grid Solu­tions that hopes to raise $18.8 mil­lion to com­pete in the space, accord­ing to a fil­ing.

The San Fran­cis­co-based com­pa­ny, which was found­ed in 2012, has closed on about $7 mil­lion of the round. The fil­ing says there are 14 investors par­tic­i­pat­ing in the fund­ing, and pre­vi­ous­ly the com­pa­ny has only dis­closed that it has been “fund­ed with pri­vate equi­ty from undis­closed sources.”

Advanced Micro­grid Solu­tions takes lithi­um-ion bat­ter­ies and uses smart soft­ware to man­age bat­tery banks for both com­mer­cial and indus­tri­al cus­tomers as well as util­i­ties. These types of bat­tery farms can pro­vide ser­vices like back­up pow­er for the pow­er grid dur­ing peak grid use, ener­gy at night when paired with solar pan­els, or bat­tery ener­gy for a build­ing when elec­tric­i­ty rates from the pow­er grid are high.

Attendees take pictures of the new Tesla Energy Powerwall Home Battery during an event at Tesla Motors in Hawthorne, California
Atten­dees take pic­tures of the new Tes­la Ener­gy Pow­er­wall Home Bat­tery dur­ing an event at Tes­la Motors in Hawthorne, Cal­i­for­nia April 30, 2015. Tes­la Motors Inc unveiled Tes­la Ener­gy – a suite of bat­ter­ies for homes, busi­ness­es and util­i­ties – a high­ly-antic­i­pat­ed plan to expand its busi­ness beyond elec­tric vehi­cles. REUTERS/​Patrick T. Fal­lon – RTX1B28QPho­to­graph by Patrick Fal­lon — Reuters

Tes­la is also sell­ing its Pow­er­pack bat­ter­ies to pro­vide sim­i­lar ser­vices, also using lithi­um-ion bat­ter­ies. And so is Stem. As is Green­smith Ener­gy, Green­charge Net­works, and Coda Ener­gy. It’s a crowd­ed space.

Advanced Micro­grid Solu­tions emerged in the spot­light late last year after it man­aged to win a whop­ping 50 megawatt deal (across four con­tracts) with util­i­ty South­ern Cal­i­for­nia Edi­son. To pic­ture how large this is, there were less than 10 megawatts worth of ener­gy stor­age installed across the entire U.S. in the first quar­ter of this year.

The start­up is react­ing to a mar­ket that’s start­ing to explode. The state of Cal­i­for­nia has a man­date that says that the big three util­i­ties (SCE includ­ed) need to col­lec­tive­ly deploy over one gigawatt of ener­gy stor­age by 2020 (1,000 megawatts equal 1 gigawatt). Many of the com­pa­nies that won deals with SCE were large, pub­lic com­pa­nies, and Advanced Micro­grid Solu­tions was one of just a cou­ple of star­tups.

Alternative Energy And Jobs
SolarCi­ty work­ers install solar elec­tri­cal pan­els on the roof of a home in Palo Alto, Calif. in 2011.Pho­to­graph by Tony Ave­lar — Chris­t­ian Sci­ence Mon­i­tor Chris­t­ian Sci­ence Monitor—Getty Images

Advanced Micro­grid Solu­tions also stands out because it was found­ed by two women and boasts more female than male exec­u­tives. The com­pa­ny was co-found­ed by polit­i­cal oper­a­tive Susan Kennedy, who was a chief of staff to Cal­i­for­nia Gov­er­nors Arnold Schwarzeneg­ger and Gray Davis, as well as a for­mer com­mis­sion­er for the Cal­i­for­nia Pub­lic Util­i­ties Com­mis­sion. Co-founder Jack­a­lyne Pfan­nen­stiel pre­vi­ous­ly chaired the Cal­i­for­nia Ener­gy Com­mis­sion, worked at util­i­ty PG&E for twen­ty years, and was the assis­tant sec­re­tary of the U.S. Navy in charge of its ener­gy strat­e­gy.

The start­up plans to deploy the first 10 megawatt por­tion of the bat­tery deal with SCE at com­mer­cial build­ings in Orange Coun­ty, Calif. by the begin­ning of 2017. The entire SCE project is meant to be done by the end of 2017. The start­up will face a penal­ty if it can’t deliv­er what SCE needs.

DBL Investors Man­ag­ing Part­ner Nan­cy Pfund, a ear­ly investor in Tes­la, is list­ed on the fund­ing fil­ing as a “direc­tor,” and Pfund has pre­vi­ous­ly dis­closed that she’s an advi­sor to the com­pa­ny.