Reflections on an important milestone
After many years of hard work by the entire Stem team, I am thrilled to report that today we became the first public pure play smart energy storage company, listed as “STEM” on the New York Stock Exchange. Our timing could not be better. Stem has accomplished this milestone at exactly the moment when our founding vision of a clean, smart, resilient electricity grid, powered by energy storage and renewables is fast becoming a reality.
The evidence is everywhere and unmistakable. Hardly a week goes by without significant climate and clean energy commitments from governments, companies and investors. Clean infrastructure investment is at the heart of President Biden’s American Jobs Plan. GM will sell only electric vehicles by 2035, when California requires all new vehicles to be electric. (You only need to reflect on the Los Angeles skyline during Covid-19 to realize the impact vehicles have on the environment; in fact, transportation is now the largest contributor to climate change.) Recent power outages and financial losses from extreme weather, plus broader safety and resilience concerns around Covid-19 have highlighted both the importance and the fragility of our aging electricity grid. Grid modernization and smart energy deployment, technical topics that now grace mainstream media, are broadly recognized as key drivers of America’s long-term economic competitiveness. The list goes on.
Energy storage is key to the clean energy transition. Without the ability to store and discharge renewable energy, a zero-emissions grid simply would not be possible. Consequently, energy storage is projected to be a $1.2 trillion global market, with 25x growth by 2030. With more than a decade of market leadership, Stem is excited to take the next step in our evolution with the financial resources to continue leading the way to a clean energy future.
It has been an amazing journey. Stem’s origin story is similar to many Silicon Valley start-ups: a handful of smart, creative thinkers, some of whom still work at Stem, brainstormed ideas (in a garage, no less) about leveraging an emerging technology to make the world a better place. In our case, the vision was “virtual power plants” and the technology was battery energy storage, which at the time was too small and expensive to be practical in most cases. But our founders knew the real secret was software that could predict and respond to market needs instantaneously.
As battery technology matured, costs came down and deployments ramped up – first in California and Hawaii, then in Texas, Arizona, New York, Massachusetts and now in Minnesota, Connecticut, Virginia and the many other states where storage is making inroads. Stem also expanded internationally to Japan, installing the first commercial and industrial (C&I) storage systems around Tokyo, and then became the market leader in Canada.
Stem is now active in all energy storage markets, and one of our long-term goals is helping to unlock “full storage value” in all 50 states and internationally – engaging with partners in new markets and working with policy leaders to ensure storage can provide its full range of services to customers, utilities, and the grid.
On a personal note, this has been an amazing chapter in my career. A colleague recently sent me a picture from my first day at Stem, and so much has changed since then. We only had about 25 employees and five operating sites and had just raised about $15 million in Series B funding (representing a significant portion of Stem’s valuation at the time). I am very proud of the team we have assembled and the execution we have driven with minimal headcount.
Inevitably there were some bumps along the way. But one of the things I am proudest of is how Stem has successfully adapted and evolved in a fast-moving market. We hired great talent and expanded our leadership in California’s C&I market, where we still hold a 75% share, and have focused on a partner sales model and front of meter (FTM) projects which continue to represent a large and growing share of our business. Moreover, our world-class AthenaTM smart energy software continues to widen the moat between Stem and our competitors. Athena recently delivered a 30% performance improvement compared to the previous software provider in our 345MWh Southern California portfolio – benefitting commercial and municipal customers, the portfolio’s investor, and the local utility.
Today marks the end of Stem’s first phase but the beginning of a much longer road ahead, one that will ultimately see energy storage and renewable energy powering a fully decarbonized global economy. It has been my great privilege to lead Stem for these last eight years, and I could not be prouder of the team and what we have accomplished. Buckle up, because the next chapter will be remarkable! I have great confidence in the Stem team, our partners and our board as we continue to extend our global leadership.