FlexGen steps into Powin bankruptcy proceedings as stalking horse bidder

In May, Powin notified authorities in its home state of possible layoffs and cessation of business operations by the end of July if solutions could not be found. This was followed up by the company filing for Chapter 11 protection in June as it also launched a separate services arm business, Powin Project LLC.

The news came amid a turbulent time for the US BESS industry, with Powin citing the impact of industry headwinds, including policy uncertainty over the future of US import tariffs and the future of investment tax credit (ITC) incentives, as driving factors in its “significant financial challenge”.

On 26 June, the clerk at the New Jersey US Bankruptcy Court filed an interim order authorising the debtors, i.e., Powin and its subsidiaries, to obtain post-petition operational cash flow financing.

The document went on to describe the permission granted to the debtors to obtain a secured superpriority debtor-in-possession (DIP) delayed drawdown term loan for US$27.5 million.

FlexGen was named as the stalking horse bidder behind the DIP Lender offer. The loan’s Term Sheet specified that Powin could access US$10 million upon entry of the interim DIP financing order, US$5 million upon entry of the final DIP financing order and US$7.5 million on 4 August, subject to entry of the final DIP financing order.

The remaining US$5 million could be drawn down on the same date, unless by that point FlexGen has already begun agreeing to take on Powin employee contracts as part of a sale of the company, in which case the advance would be reduced by US$4 million.

Energy-Storage.news has reached out to North Carolina-headquartered FlexGen for comment on the proposed acquisition and asked about the value proposition FlexGen leadership sees in Powin. This story will be updated or a follow-up written on receipt of responses.

By way of speculation, it could be the case that FlexGen not only wants to take on Powin’s extensive customer base and project portfolio in the US and overseas, but also sees Powin’s range of products and services as complementary to its own.

FlexGen began as a microgrid controls specialist and, according to sources inside and outside the company, sees its main strengths as being in the 15-year field deployment track record and development of its energy management system (EMS) software platform, Hybrid OS.

In an interview at the beginning of this year, FlexGen CEO Kelcy Pegler said that the company’s fleet in California’s CAISO and Texas’s ERCOT markets had been third-party verified as achieving 98% availability throughout 2024, which the CEO claimed was an industry-leading figure.

“Leveraging advancements in artificial intelligence, we have accelerated the capability of our software, enabling faster and more precise decision-making across battery asset operations,” Pegler said.

“At the same time, we’ve simplified the user experience, reducing training and operational hurdles by embedding 15 years of operator expertise into millions of lines of code.”

Put simply, FlexGen procures battery storage hardware and integrates it with the software to switch it on and keep it running, as one former executive told this site. This approach is perhaps exemplified by a recent deal between the company and Chinese solar PV and storage manufacturer Trinasolar for a 371MWh project in Texas with developer SMT Energy.

On the other side of the table, Powin’s background is in a combination of battery storage hardware integration and battery management system (BMS) development. Its product range includes two modular BESS solutions, the Centipede and Powin Pod, alongside its StackOS BMS.

In a recent interview with ESN Premium, Drew Lebowitz, an energy storage consultant and engineer at advisory PowerSwitch, said that Powin was a pioneer and early leader in US BESS system integration, priding itself on integrating Chinese-bought cells into its systems, where rivals were instead starting from “racks and bigger components.” Powin’s BMS played a central role.

However, Lebowitz also said that while industry headwinds had likely exacerbated pressures on Powin—and other industry players—the system integration space was being squeezed into consolidation by the entry of Chinese battery cells OEMs into the BESS manufacturing space.

One prominent example is the world’s biggest lithium-ion battery maker, CATL, which is not only one of Powin’s cell suppliers but is also a major supplier of BESS solutions to FlexGen. In 2022, FlexGen signed a multi-year 10GWh supply deal for CATL’s EnerC containerised liquid cooling BESS.

According to Lebowitz, non-Chinese system integrators like Fluence, Wartsila or Tesla could be competitive if they can differentiate their offerings based on quality, track record and customer engagement. Another major factor that may come into play is the demand for domestically produced, or at any rate, non-Chinese, equipment from the US market, which of course is a topic of hot debate currently playing out in Congress with the budget reconciliation bill.

Furthermore, Powin’s customer base and installed portfolio is significant, including large-scale projects in operation, construction or under contract not only in the US, where FlexGen is also active, but also overseas in territories including Australia, Asia and Europe. FlexGen has previously signalled its interest in non-US markets but is yet to announce any signed contracts.