Leading U.S. commercial energy storage startup Stem laid off
employees at the end of April, sources familiar with the situation
The layoffs came as a surprise to employees on the morning of
April 29. Roughly 15 people were sent home by noon, the sources
Than Tran, Stem’s vice president of global demand generation and
marketing, confirmed the layoffs to GTM and said they totaled less
than 10 percent of the workforce.
The cuts came as the company transitions from a business model
of developing energy storage to providing its storage management
software to installer partners. Stem made a “conscientious effort”
to streamline operations and refocus on recruiting and supporting
installer partners, Tran said.
“None of the revenue-driving departments were impacted,” he
Among the cuts, the regulatory team lost both Polly Shaw, vice
president of regulatory affairs and communications, and Jim Baak,
senior manager for regulatory affairs for the Western region. Ted
Ko remains in the role of policy director.
Shaw and Baak played prominent roles arguing on behalf of the
company in regulatory debates crucial to the energy storage
business model, including the
evolving structure of California’s Self-Generation Incentive
Program, of which Stem is a leading recipient, and the ongoing
effort to define how energy assets can play multiple grid roles
“Polly and Jim did great in terms of setting the groundwork and
opening new markets for us,” Tran said.
The reduction in the team decreases Stem’s capacity to intervene
compared to before, at a time when the storage industry’s
regulatory battles are far from over. But, Tran noted, Ko
“continues to be extremely busy and active” in policy and
A shift towards software
Stem launched in 2009,
under the name Powergetics, with the goal of monetizing several
functions of energy storage at once. It would place batteries in
businesses to reduce their charges for peak demand, while also
delivering grid services through utility contracts or wholesale
market participation (and collecting the SGIP incentive).
The startup made a name for itself in 2014 by winning an
85 megawatt contract with utility Southern California Edison to
install distributed, flexible capacity.
Stem’s first projects began operations in 2012. Since then,
the startup has led its peers in the scale of its network of
commercial installations — 100
megawatt-hours across 200 sites, as of December 2018.
Software had always been crucial to Stem’s business, because
discharging a battery during a customer’s peak first requires
predicting when that peak will arrive. More recently, though, Stem
chose to foreground the software aspect of its business.
Installing energy hardware takes time and suffers from delays in
customer acquisition, contracting, permitting and interconnection.
Software is less capital intensive to produce and scale, and more
appealing to venture capital investors.
Stem’s press releases started referring to the company as “the
world leader in Artificial Intelligence (AI)-driven energy storage
services.” The webpage for
its Athena software states the case more boldly: “Think brain
power — not battery power.”
The broader commercial and industrial storage segment grew up
alongside Stem, and just
delivered a record 44.9 megawatts of capacity in the first
quarter of 2019, according to data from Wood Mackenzie Power &
Previously, C&I deployment numbers wavered up and down from
quarter to quarter. A long development cycle means that the success
in Q1 could say more about deals signed a year or two ago than
about conditions today. But the long-term deployment trend runs in
a distinctly positive direction.
Commercial solar installers have shown increasing interest in
adding energy storage to projects, like in southern California,
where time-of-use rates weakened the value proposition for
standalone solar, or in Massachusetts, where the SMART incentive
pays extra for storage-paired solar systems.
Under Stem’s new approach, the company recruits solar installers
that want to add storage to their repertoire, and supplies them
with advice and software to deliver customer savings. In theory,
the partnership model gives Stem a more capital-efficient route to
market while saving installers the trouble of building out storage
Stem raised $211,102,700 in publicly announced funding,
according to Wood Mackenzie’s Grid Edge Database. The company
also raised $355 million in project financing to offer
no-money-down service contracts to customers.
Source: FS – GreenTech Media
Stem Lays Off Workers Amid Strategic Shift Towards Energy Storage Software