Tech Company Revolutionizes Energy Distribution System

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2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Eguana Technologies Inc. 
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The power crunch is here, and it is real, energy officials say. With artificial intelligence, computer data centers, electric vehicles, and a parade of new power-hungry gadgets sucking increasing amounts of electricity out of the grid, utilities are looking to new models from companies like Eguana Technologies Inc. (EGT:TSX.V; EGTYF:OTCQB) to distribute it.

The company, founded in 1999, recently pivoted to focus on high-performance residential and small commercial energy storage systems, networked into fleets, through its proprietary virtual power plant (VPP) fleet management software.

For years, the focus on creating increasingly efficient electronic devices (such as LED lighting, smart thermostats and heat pumps, etc.) has kept the demand in check, but energy requirements are outstripping utilities' abilities to add grid infrastructure, like transformers, meaning utilities have to look at new ways of getting electricity to their customers.

"It's grid infrastructure," said Chief Executive Officer Justin Holland. "Because of that complacency period . . . supply chains were not properly managed as result. Now everybody needs the power at the same time. So, your costs are out to lunch."

Enter the VPP, which uses smart batteries at the edge of the grid (the homes and businesses that use the energy) tied to software that helps distribute and store energy in the batteries when it's not needed and makes it available to the grid at peak times.

"You can only put so much power through that substation when you go from main grid to feeder line, there are no two bridges to the feeder line," Holland said. "When you've got growth (from) EVs, data centers, AI, population, it doesn't matter.  Any growth.  Now you've outstripped the capacity of the substation at peak periods."

Holland continued, "Now what they can do is they can load those grid connected batteries overnight. Then, they can draw backwards out of the battery. So, there's no longer overcapacity at the substation; the consumer doesn't even know."

'A Full-Blown Global Energy Crisis'

According to a report by the International Energy Agency, other factors driving the coming energy shortage include fuel shortages and rising poverty. The situation escalated dramatically "into a full-blown global energy crisis" after Russia's invasion of Ukraine, with natural gas prices reaching record highs and oil prices rising.

"Higher energy prices have contributed to painfully high inflation, pushed families into poverty, forced some factories to curtail output or even shut down, and slowed economic growth to the point that some countries are heading towards severe recession," the agency noted. "Europe, whose gas supply is uniquely vulnerable because of its historic reliance on Russia, could face gas rationing this winter, while many emerging economies are seeing sharply higher energy import bills and fuel shortages."

To keep up with demand and what is being called the "electrification super cycle," Eguana noted that global electricity needs to double in 30 years, and "current infrastructure cannot manage this growth."

To upgrade traditional feeders, utilities must plan years in advance and commit large amounts of capital to upgrading the system. "In many cases, the full capacity (of those updates) will never be used because the minimum upgrade increment is greater than the foreseeable load growth," Eguana noted in its investor presentation.

utilities must plan years 

Eguana's Edge system gives utilities flexibility to increase feeder growth incrementally.

"They don't have to make a 30-year bet now," Holland said. " They can build the capacity of that feeder line as they need it.  They defer tons of capital, and they get immediate relief on the power grid. The electrification super cycle is coming."

According to the company, 80 to 160 gigawatts (GW) are expected to be managed by VPP's by 2030, a 167% increase in seven years.

The energy storage market is expected to be worth US$250 billion by 2030 with a compound annual growth rate (CAGR) of 16%, Eguana noted.

Modernization Will Require Multiple Technologies

With "thousands of deployed systems," Eguana is "one of the only renewable companies with fully integrated, proprietary and patented, hardware and software platforms delivering state of the art power grid infrastructure along the grid edge," the company said.

Modernization of the system will require multiple technologies, and the central piece orchestrating it all is the Advanced Distribution Management System (ADMS), the company said.

"Eguana’s utility-grade residential energy storage systems deliver front-of-the-meter value from behind-the-meter, avoiding cost and real estate, while delivering backup power to the consumer," it said.

To help make it happen, Eguana has partnered with more than 20 North American utilities as well as major players in the Distributed Energy Resource Management Systems (DERMS) space. It has ongoing projects demonstrating VPP power grid impact in Nova Scotia, Vermont, Oregon, California, and Hawaii, including more than 200 systems being installed in British Columbia, the largest targeted feeder line upgrade with batteries to date.

Most recently, Itron — the global leader in electric smart meters, has partnered with Eguana to deliver the first smart meter/battery combination.

Itron holds 60% of the smart meter market, Eguana said. Utilities are about replace early smart meters and Eguana said it is the first to integrate with the new standards for increased utility grid control. Eguana said the product will be promoted by both Eguana and Itron to its more than 1,800 utility partners.

System 'Agnostic to the Battery'

The Eguana Cloud provides remote control of demand response and system-level services through its open-source software that readily adapts to other battery systems into its fleet management, including the Tesla Powerwall.

It also provides backup power management for homeowners and gives them an operating history.

Meanwhile, Eguana's proprietary Edge software "provides advanced feeder level functions that form the basis of a standalone ADMS solution for distribution utilities," the company said.

Utilities get detailed dashboards controlling their systems and can see demand response performance on a time chart.

The company also provides batteries, or energy storage systems, for end-users. In the British Columbia demonstration system, the utility has purchased the systems and will give them to homeowners on a 100% rebate.

But the company's VPP and ADMS systems will work with other hardware, as well.

"We're agnostic to the battery, which really allows us to manage our cost structure," Holland said. "But the bread and butter of the mousetrap is in the power controls that push the power into and out of the battery, and that's what we do better than anybody else."

VPPs 'Increase Overall System Resilience'

According to the Solar Energy Industries Association, VPPs are set for "massive growth thanks to the 2022 Inflation Reduction Act, which created or enlarged tax incentives for EVs, electric water heaters, solar panels and other devices."

VPPs allow solar and storage to punch above their weight and can take serious strain off the grid. RMI estimates that by 2030, VPPs could reduce America's peak demand by 60 GW, the average consumption of 50 million.

Kevin Brehm, a manager at Rocky Mountain Institute who focuses on carbon-free electricity, told MIT Technology Review's June Kim last February that comparing VPPs to traditional plants is a "helpful analogy," but VPPs "do certain things differently and therefore can provide services that traditional power plants can't."

"One significant difference is VPPs' ability to shape consumers' energy use in real time," Kim wrote. "Unlike conventional power plants, VPPs can communicate with distributed energy resources and allow grid operators to control the demand from end users."

"These distributed energy sources connect to the grid through communication technologies like Wi-Fi, Bluetooth, and cellular services," Kim continued. "In aggregate, adding VPPs can increase overall system resilience. By coordinating hundreds of thousands of devices, VPPs have a meaningful impact on the grid — they shape demand, supply power, and keep the electricity flowing reliably."

Ownership and Share Structure

According to the company, about 0.5% is owned by management and insiders, and 24.6% is held by the Japanese ITOCHU Corp.

The company has 424 million shares outstanding and a market cap of CA$4.51 million, according to Reuters. Its 52-week range is CA$0.01 and CA$0.02.