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8-K - ENSYNC, INC. 8-K - EnSync, Inc. | ensync8k.htm |
EnSync, Inc. September 2016
Forward Looking Statements THIS PRESENTATION INCLUDES FORWARD-LOOKING STATEMENTS THAT ARE MADE PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS, AS A RESULT OF VARIOUS FACTORS INCLUDING THOSE RISKS AND UNCERTAINTIES DESCRIBED IN THE RISK FACTORS AND IN MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SECTIONS OF OUR MOST RECENTLY FILED ANNUAL REPORT ON FORM 10-K AND OUR SUBSEQUENTLY FILED QUARTERLY REPORTS ON FORM 10-Q. WE URGE YOU TO CONSIDER THOSE RISKS AND UNCERTAINTIES IN EVALUATING OUR FORWARD-LOOKING STATEMENTS. WE CAUTION READERS NOT TO PLACE UNDUE RELIANCE UPON ANY SUCH FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE MADE. IN THIS DOCUMENT, WE REFER TO INFORMATION REGARDING POTENTIAL MARKETS FOR PRODUCTS AND OTHER INDUSTRY DATA. WE BELIEVE THAT ALL SUCH INFORMATION HAS BEEN OBTAINED FROM RELIABLE SOURCES THAT ARE CUSTOMARILY RELIED UPON BY COMPANIES IN OUR INDUSTRY. HOWEVER, WE HAVE NOT INDEPENDENTLY VERIFIED ANY SUCH INFORMATION.This presentation copyright 2016 by EnSync, Inc. 2
EnSync Energy Distributed Energy Generation Systems and Services Company Distributed Energy Resource to Utility Connectivity High-Performance Energy Storage Systems Distributed Energy Systems from Design through O&M 3
Market Opportunity
So What’s the Problem? Risk of Loss of ITC Drives “Pull-ins” Return to Growth Trend Line The Solar Market is Booming30% ITC Extended through 2019 – Will Continue to Stimulate Growth 5
Drivers for Energy Storage and Solar + StorageDifferent Drivers and Motivations for Different Segments Utility Segment Government Driven Policies to Replace Carbon Emitting Energy Sources with Renewable SourcesResult: Intermittent Generation Replacing Stable Generation; storage can smooth intermittencySolar (and Wind) Peak Generation is Not During Peak Demand PeriodsResult: Disconnect in supply vs demand must be corrected by energy storage or expensive gas “peaker” plants (California) Net Metering programs highly stimulative for solar market - excess production paid for by utility at retail rate until monthly bill goes to “zero” – but really non-solar customer paying Result: Net-Metering punishes non-solar customers and at some point must be scaled back or removedSolar export to the grid is disruptive and can cause distribution issues and outagesResult: At some point excess export into grid must be stopped or managed by utilityUtility income decreases with more solar deploymentResult: Utilities have difficulties raising rates, so look for additional revenue – Demand Charges and Time of Use Rates, for example Commercial and Industrial (C&I) and Residential Segments 6
C & I and Residential Solar Growth Cannot Continue without StorageNet-Metering Curtailment, Time of Use Rates and Demand Charges will Create Market Inflection for Storage ? 7
Solar Penetration Creating Grid Problems Hawaii Must Eliminate or Reduce Net-Metering 8
Policy Changes Drive Self-Generation and Solar + Storage Market Growth in USAMarket for C&I and Residential Solar + Storage Systems will be at Least $1.0B Annually by 2018 Source: GTM 9
EnSync Differentiated Products and Services Leading Technology for Distributed Energy Generation Market Applications and systems expertise, from economic modeling to system design to deploymentProprietary “Auto-Sync” DC-Bus Control architecture for more efficient, cost effective and “future-proof” systems IP protected hybrid energy storage solutionsInnovative business model – PPA’s with Solar + Storage, in C&I and microgrid applications, in addition to standard system salesGlobal position and partnersProven commercial installations around the world – real systems generating real savings and revenue EnSync Systems are Deployed in Commercial Installations and Make or Save Money Every Day 10
A Series of Industry Firsts in Innovation and Commercialization First deployment of integrated, concurrently controlled “hybrid” energy storage systems “behind the meter”First sale of a “behind the meter” solar plus storage PPA to a 3rd party investor, in Hawaii (and likely the entire United States)First commercialized energy management system utilizing common DC-Bus and real time active control of multiple power inputs, with no controller or algorithms.First interconnect permit granted for solar plus storage for the Hawaii C and I marketFirst Company providing the total solution set for integrating Distributed Energy Resources from the Utility - EnSync provides Energy Storage, Energy Management System, PV and the Internet of Energy platform.First inverter qualified to Hawaii “Smart Inverter” standardsFirst flow battery to receive an official report for commercial operation and grid connection from the State Grid Corporation of ChinaFirst commercial deployment of flow battery technology for mobile back-up power 11
Battery Portfolio and Hybrid Storage
EnSync Energy Storage Solutions Portfolio Modular and Scalable – Small C&I to Large Utility 13 Flow Batteries4-8 Hrs. Energy Applications Li Ion Power Batteries0-30 Min. Power Applications Li Ion Energy Batteries2-3 Hrs. Energy Applications Aqueous Batteries>8 Hr. Low Load, Energy Applications
C&I Solar + Storage Projects Have Many Possible ApplicationsValue of ESS System Maximized by Doing Multiple Applications Income Opportunity DG Electricity Sales Renewable Smoothing DR Revenues Ancillary Services Market DSM/DR Up/Down Flexibility Access Higher PPA Prices Volt/Var Support Frequency Regulation and Load Following Services Shift Excess Solar Generation for Future Use at Higher Time-of-Use Tariff Cost/Risk Reduction Time-of-Use Shifting Improved Power Quality Peak Demand Charges Reduce Generator Costs Reduce Electricity Bill by 20% to 50% with Peak Demand Shaving Improve Power Quality Backup GenerationIslanding During Outages Reduce Backup Generator Operation and Cut Fuel Costs (Natural Gas and Diesel) Resiliency for Outages Source: GTM, EnSync End-Customer Benefits: Enable DG Market Participation (VPP, DER Marketplace) 14
EnSync Storage Portfolio Covers All C&I Applications Enables All Applications to be Economically Addressed Source: EnSync, SEIA, GTM Flow Battery, ≥ 4 Hrs.“Energy” Use Cases Li Ion Power Battery, <30 Min. Use Cases Li Ion Energy Battery, 1-3 Hrs. Use Cases Discharge Duration Power Quality Freq. Reg.Load Following Renewables Smoothing Peak DemandCharges DRRevenues Fuel CostSavings Time of Use / Rate Shifting DG to GridElectricity Sales Resiliency Short Medium Long Infrequent Occasional Frequent Frequency of Use 15
Hybrid Energy Storage Systems for C&I & MicrogridsEnSync Pioneered Commercialized Hybrid Energy Storage Solutions Proprietary Hybrid Control Platform, Utilizing EnSync Auto-Sync DC-BusNo Central Controller RequiredMultiple Technologies Hybridized to Deliver Best Possible EconomicsAny Set of Applications can be Performed EconomicallyReal-Time, Active ControlProven More than 18-Months in Real-World UsePatent Pending filed 9/3/15 Discharge Duration Power Quality Freq. Reg.Load Following Renewables Smoothing Peak DemandCharges DRRevenues Fuel CostSavings Time of Use / Rate Shifting DG to GridElectricity Sales Resiliency Short Medium Long Infrequent Occasional Frequent Frequency of Use 16
Matrix Energy Management System and Auto-Sync DC-Bus Control Platform
Matrix Energy Management PlatformFully Differentiated C&I and Microgrid Solution Plug and play DC-AC and DC-DC “drawers” enable configuration for any building specific load, PV system, storage technology and storage size. Proprietary “Auto-Sync” DC-Bus Control PlatformActive prioritization of grid, renewables and storage produces electricity based on most efficient and economic result, without fixed algorithms and a central controller.Efficient, simple, modular, scalable, reconfigurable and future proofUL1741 and Hawaii “Smart Inverter” spec compliant 18
Matrix Energy Management System Synchronizes the Load, Distributed Generation and Utility Grid through the Proprietary “Auto-Sync DC-Bus” Control Platform Highest efficiencyBest economicsModular and Scalable Matrix Energy Management System 19
Matrix Energy Management Platform Significant Advantages Over Competition Function or Application EnSync Matrix Product A Product B Active Energy Synchronization for any or all DC and AC Inputs and Outputs without System Controller / Complex Algorithms ✔ Can manage every power and energy storage application under simultaneous operation ✔ Modular, Scalable, Efficient and “Future Proof” for 20 Year service life ✔ Demand Response ✔ ✔ ✔ Frequency Regulation ✔ ✔ “Rate Shifting” ✔ ✔ “Peak Shaving” ✔ ✔ Demand Charge “Clipping” ✔ ✔ Renewable Firming ✔ ✔ Full Data Logging and Forecasting of Generation and Storage ✔ “Supply Response on Demand” between Building DG and Grid Network ✔ DC Output Management and Control (eg. DC lighting, Building DC) ✔ Microgrid Operation ✔ ✔ Max. Power Point Tracking ✔ ✔ Power Factor Correction and AC Bus Voltage Regulation ✔ ✔ Islanding ✔ ✔ 20
Transformation of EnSync Energy BatterySalesTechnology dates to 1980’s (Exxon) and 1990’s (Johnson Controls) Integrated System SalesUtility Storage and Energy Management SystemsCommercial and Industrial Building Energy Management and Storage SystemsService Contracts ElectricitySalesPower Purchase Agreements, including EnSync products, EPC and 3rd Party Products (eg. solar)Initial cash intake from sale of equipment and services into PPASale of the high yield PPA 21 Pre-2013 2013 2015 Internet of EnergyMove from Demand Response to “Supply Response on Demand”Spot Market Electricity SalesFully connected DER networks 2016 andBeyond 21
Distributed Energy Resource (DER) to Utility MarketplaceEnSync Delivers the Total Solution for the Energy Market of the Future Matrix Energy Management DER to Utility Marketplace Energy Storage System Internet of Energy “IOE” Control Platform EnSync Provides Fully Differentiated Solutions for All Three Critical “Legs of the Stool” 22
EnSync “Internet of Energy” PlatformEnables DER to Utility and ISO Marketplace C&I Building Energy Markets Access EnSync “IOE” Control Platform 23
EnSync Internet of Energy PlatformCompatible with all Major Hardware and OS Platforms Multiplatform support SmartphoneTablet DesktopOperating Systems IOS / Android OSX / Windows / Linux Communications EnvironmentsEthernet Cellular WiFi SCADA 24
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Real-Time Dispatch Locational Marginal Price Utilized to Trigger Buying and Selling 26
Business and Financials
Current EnSync Business Overview Current Hawaii PPA ProjectsEnSync Tranche 1: Seven of eight projects included in the initial Hawaii tranche have been transacted (sale or sale-leaseback). One additional project in backlog.EnSync Tranche 2: Four contracts closed. Additional opportunities being worked for inclusion.Total Backlog of PPA projects estimated market value of >$5.0M at time of saleFuture PPA ExpansionConcentration of projects in Hawaii through calendar year 2016 – Expected majority share of >$50 million market over two years is on track.Goal of $10 to $20M per tranche; 2 additional tranches in FY2017Expand PPA model into California in 2017Opening of sales office in Petaluma, CaliforniaSystems BusinessConcentrated in the USA and CaribbeanEstimate served market of >$400M over next 24-monthsExpansion into Asia in 2017 EnSync has an 85% Ownership Interest in Holu Energy 28
EnSync Sells First Ever PV + Storage C&I PPA’s 29
Pioneer of PPA’s for PV + Storage in C&IElectricity spending reduced by >$2 million over 20 year term Century West Condominium: Oahu, Hawaii Multi-tenant CondominiumConfiguration:400kW of Carport PV; 460kWh EnSync Hybrid Energy StorageEnSync Energy Management SystemFirst behind the meter PV + Storage PPA in OahuPPA Term: 20 Years University of the Nations: Kona, HawaiiEnSync design inoculates system from utility “curtailment”Configuration:408kW of rooftop PV; 400kWh EnSync Hybrid Energy StorageEnSync Energy Management SystemFirst behind the meter PV + Storage PPA on HawaiiPPA Term: 20 Years 30
EnSync also Targets “PV-only” Projects Simple Process to Add Energy Storage at a Future Date EnSync also developing projects with PV onlyInstall Matrix Energy Management System to integrate the PV with the building loadStorage can be added at a later date through a simple upgradeTypical projects in the addressed “PV-only” market range from 60kW to >500kW$400K to >$2.0M Honolulu Christian Church Villages of Kapolei Community Center 31
OATI (Open Access Technology International)Connecting the Utility to the Distributed Generation Located in Bloomington, MinnesotaMatrix Energy Management System and Agile Hybrid Energy Storage incorporated into the OATI Microgrid Demonstration and Data CenterMatrix is a vital part of OATI’s utility control platform for utility to Distributed Energy Resources (DER’s) controlPenetrated with >90% of USA and Canada utilitiesCommissioning Complete by Dec. 2016 OATI South Campus(Bloomington, Minnesota) 32
Off-Grid Commercial ComplexCayman Island Technology Center Cayman Technology Centre (CTC) in the Cayman Islands, a >30,000m2 mixed commercial and office complexAdvanced energy management and energy storage system for the largest "off-grid" renewable energy installation in the Cayman IslandsOff-Grid Complex with 450kW PV, 500kWh Hybrid Storage, Energy Management System & Diesel Gen SetCaribbean reference projectReplaces $0.40/kWh grid electricityCommissioning complete by Dec. 2016 Cayman Technology Center(Grand Cayman) 33
Assembly Line at EnSync China JV FacilityMeineng Energy in Wuhu City, Anhui Provence Agile Flow Batteries in Build Matrix Production Area Utility ESS Module 34
Experienced Management Team Brad HansenCEO, President & DirectorApplied Materials, Boeing, Meineng Energy Kevin DennisVice President of Engineering& Product DevelopmentABB Fred VaskeVice President ofStructured FinanceSunpower, Recurrent Energy Sherry XiaVice President ofAsia Business and OperationsDuPont, 3M, Applied Materials James SchottChief Financial OfficerWEC Energy Group, Integrys Energy Group Dan NordlohExecutive Vice President ofGlobal Business DevelopmentNaviant Inc., TantaComm Rick WhismanVice President ofSalesSunpower, Powerlight Ted Peck – CEO Holu EnergyHawaii State Energy Administrator, Booz Allen, Johnson Controls, United States Navy 35
Selected Balance Sheet DataAs of June 30, 2016 ($ in Millions, except per share) As of 6/30/2016 Cash and cash equivalents * $17.2 Project Assets** $6.9 Inventory $1.9 Total assets $34.3 Deferred revenue $13.3 Bank loans and notes payable, net of current maturities $1.4 Total shareholders’ equity $18.0 * Note: Cash on Hand August 31 of ~$21.5M** Note: Includes assets sold to AEP Onsite Partners 7/29/16 36
PPA Model Tranche 1 ResultsSummary to Date (5) Projects Sold to AEP Onsite Partners(1) Project Completed a “Sale-Leaseback” with a Renewable Energy Services Company(1) Project Sold to Hawaii InvestorSale of (1) Project in ProcessOperations and Maintenance (O&M) Agreements in Place: >$25K per year in Year 1, with escalator through 20 years.Upside Revenue Potential from Demand Charge Reduction and Grid Services for the AEP projects. 37
PPA Financial Model Going ForwardChanges from Tranche 1 Significant cost reductions are forecasted as we move into the second project tranche>35% reduction in PV Engineering, Procurement, Build (EPC) costs>20% reduction in Energy Storage costsReduced configuration expense due to 20ft. Container “Supermodules” vs. small battery modulesLower cost through contractingLower cost due to Li Ion battery cost reduction>25% reduction in Matrix Energy Management system costsReduction in permitting time, contracting expenses (common legal documents)Expected profit for Tranche 2 projects and beyond of 10-20% 38
Company Financial ModelTargeted Performance Q1’17 (Current Quarter) Revenue:Operational Break Even: PPA Tranches in FY2017:PPA Gross Profit Target: Systems Business Gross Profit Target: Op Ex (Cash Expense Burn Rate):Headcount: 39 $7.3M or HigherCash flow break-even run rate at end of calendar year 20172 additional tranches in FY201710-20% on project sales20-35% of sales<$3.1M per quarter (excluding stock expense)73 Regular, Full Time