Verengo Solar has teamed up with Swell Energy to offer a turnkey energy storage solution in California. Under the agreement, Verengo will serve as a preferred installer of home solar battery products sold on Swell’s platform.
The partnership aims to position Verengo as a leading home battery provider as the market scales. It also builds momentum for Venice-based startup Swell, which has created an energy storage marketplace to connect customers with high-quality battery products and trusted installers.
“For us it’s a natural fit -- Swell is out there talking to customers, marketing, selling and originating, which allows Verengo to focus on its core competencies, which are managing jobs from design through installation,” said Robert Angell, Verengo’s director of business development.
"Swell is also managing the purchasing piece,” he added. “We’ve structured a capital-efficient process to minimize cash outlays until we’ve received payment. This allows us to use our working capital to improve processes and invest in growth."
Home energy storage allows customers to take in grid energy when rates are low and store up excess solar during the day for use at peak times, thereby saving money and maximizing solar use on-site. In the event of a power outage, energy storage also allows customers to power their homes cleanly and quietly independent of the electrical grid for up to one day, or potentially indefinitely when paired with solar.
“We are seeing tremendous demand for home batteries, driven largely by advances and cost reductions in smart lithium-ion battery technology, combined with increasing concerns around power outages and grid vulnerabilities among homeowners,” said Swell Energy co-founder Andrew Meyer, in a statement. “By partnering with an established and well-respected installer like Verengo, we are making home battery backup a painless, quick and convenient addition for hundreds of thousands of energy-conscious customers across the state.”
A lot of Swell’s messaging is around energy security and independence, but that doesn’t mean it's advocating for customers to go off-grid. Swell maintains a relationship with its customers by managing maintenance requests and communication with installers. Eventually, Swell plans to leverage this growing community of home batteries to provide grid services.
“We’re trying to align interests,” said Meyer in an interview. “We’re working with customers who want backup power, the ability to consume their own solar power, and want to achieve a certain level of grid independence. In parallel, we are working with utilities to find out where storage could benefit the grid.”
Building an "emotional brand"
About a year ago, Elon Musk successfully brought home energy storage into the limelight with the launch of the Tesla Powerwall. Musk said the battery could “fundamentally change the way the world uses energy,” and the media ate it up. But for all of the hype, the residential energy storage market is still tiny.
Last year, there were just 454 grid-connected home batteries installed in the U.S. representing a total of 4 megawatts of storage capacity, according to GTM Research. This year, GTM Research projects that sales will total 16 megawatts of storage capacity. But that number could jump to 463 megawatts of capacity by 2020 -- an achievement Swell wants to help bring about.
"We’re believers in this market and willing to stick our necks out to lead the brokering of relationships between manufacturers and customers,” said Meyer. “We believe that at some point in the next 25 years, most homes in the country will have an energy storage solution, and we’re here to fan the flames.”
Swell is not an equipment manufacturer; it’s a technology-agnostic home battery dealer. The company website offers potential customers free quotes for home energy storage solutions based on their energy use and needs. Currently, the site carries two products: the Sonnen Eco home battery and the LG Chem home battery.
Swell also offers financing through PACE programs and has a new loan option on the horizon. Plus, customers can apply through Swell for California’s Self-Generation Incentive Program (SGIP) -- a program that has seen some questionable practices and is in need of reform. Finally, Swell is building a network of installers, like Verengo, to deploy home battery products across California while building relationships with utilities to explore grid services.
But the first step, of course, is getting customers on board. Swell’s “secret sauce” of sorts is to leverage marketing and sales techniques from other industries. Meyer said the key is to build an “emotional brand” around energy storage products in a way that doesn’t currently exist in the energy space. By humanizing the product, the discussion around buying a home battery becomes more about customer preferences than return on investment. To steer that conversation, the company brought on Tyler Gaul, former digital strategist at TBWA\Chiat\Day.
"People think that until energy storage has an economic return, it’s not a market,” said Meyer. “We’re saying the value to homeowners goes beyond savings. There is a consumer market for residential storage today."
Swell wouldn’t discuss its customer pipeline, but claims to have strong consumer interest. Meyer said the eight-person startup is also revenue-positive with runway to grow.
A swell of support
The partners Swell has made to date are bullish on the startup.
Brent Harris, chief technology officer at Eguana, commended Swell for putting itself out front in the nascent energy storage industry. Eguana provides the bidirectional inverter combined with E-Gear’s energy management controller in the LG Chem home battery.
“[Swell is] building a community of homeowners who value the security and self-sufficiency of energy storage, and they have developed unique aggregation models to enable their customers to benefit from the delivery of grid services in the future,” said Harris. “Storage requires far more customer education and support than net-metered PV, and we have been very fortunate to have as dedicated and forward-thinking a partner as Swell to support our product launch.”
“They’re one of the very few [companies] out there that are really trying to grab this segment by the horns and run with it. And looking at their business model, I believe they will be very successful,” said Verengo's Angell.
Verengo is less enthusiastic about Tesla’s energy storage product, he added. At $3,000, the price of the 7-kilowatt-hour Powerwall is unparalleled; however, the Powerwall is an incomplete solution.
“Tesla’s price tag is enticing, but price is not value, particularly when you’re looking at a complex solution where customers are looking for a complete energy management solution for their solar installation,” Angell said.
The first home energy storage customers are likely to be the early adopters of solar from a decade ago, which means that installers will mostly be doing battery retrofits, he said. The Powerwall doesn’t make sense for those customers because it requires a separate inverter. With Sonnen's Eco battery -- the battery Verengo will offer -- all of the components are integrated into a single unit, which means that solar companies don’t have to install three or four different boxes on the side of a customer’s home. Sonnen also offers a robust energy software platform in a product that’s been real-world tested and looks appealing.
“There’s obviously going to be price sensitivity, especially when storage becomes a mass market solution," said Angell. "But I think right now people looking at energy storage want that cool factor, and I think that's what Sonnen brings to the table.”