#243 Battery Storage Supply Chains & Future in US-China Trade War | Danny Lu | Powin

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What’s up, everyone! 

Today, we have a great episode with Danny Lu from Powin. Powin is a leading provider of BESS, w/ 8 GWh of systems built and 9 in the pipeline. 

As the Trump admin pushes for more drilling and a seemingly anti-clean energy policy (despite that not being the definition of abundance) we are seeing the value of battery storage. Prior to tariffs, building a speaker plant would be more expensive and take longer than building energy storage systems to manage grid flexibility issues. (It’s tbd what the situation will be with huge Chinese tariffs). 

Powin has years of experience working in this space to solve supply chain issues and is always improving its business to adapt to whatever battery chemistry is most feasible and affordable for its clients. 

Given all this, it was great to speak with someone who can help us understand where the market is going and what the key challenges and opportunities are that lie ahead. 

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Topics
Free Preview: 
* 00:00 Cold Open & Intro to Our Guest 
* 04:00 Origins & Evolutions of Powin
* 08:10 What They Do 
* 10:00 Creating the Market and Finding Their First Customers
* 13:00 Stepping Into a Leadership Role Out of University 
* 18:10 From Permit to Commissioning in Months
* 19:10 What an IPP/Utility Wants — Single Point of Blame
* 23:00 The Evolution of Battery Chemistry for BESS vs EV 
* 25:30 Powin’s Current Scale
* 26:50 Storage Project Market Projections Considering Tariffs
* 31:30 AI & Data Centers | BESS vs Peaker Plants
* 39:00 Manufacturing in the US? (teaser clip & paywall) 

Links
* Danny Lu | Powin
* Connect with Somil on LinkedIn | Connect with Silas on LinkedIn
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This podcast is NOT investment advice. Do your homework and due diligence before investing in anything discussed on this podcast.

Chapters

• 0:00 Cold Open & Intro to Our Guest
• 4:00 Origins & Evolutions of Powin
• 8:10 What They Do
• 10:00 Creating the Market and Finding Their First Customers
• 13:00 Stepping Into a Leadership Role Out of University
• 18:10 From Permit to Commissioning in Months
• 19:10 What an IPP/Utility Wants — Single Point of Blame
• 23:00 The Evolution of Battery Chemistry for BESS vs EV
• 25:30 Powin’s Current Scale
• 26:50 Storage Project Market Projections Considering Tariffs
• 31:30 AI & Data Centers | BESS vs Peaker Plants
• 39:00 Manufacturing in the US? (teaser clip & paywall)

Transcript

Danny Lu (00:00)
Today, our customers are IPPs and developers who are building large scale standalone or PV or wind coupled storage systems at 10 megawatt to start. As years went on, they went all the way up to gigawatt scale systems. I definitely believe that AI and data center growth is going to be a huge part of energy storage, but also renewable energy market growth. 2026.

might become the first kind of down year in storage. And a lot of that can be attributed to.

Silas Mähner (00:35)
Hey everyone, quick note for you. You're currently listening to the free preview of this episode. If you'd like the full thing, the full shebang, go over to our sub stack. That's cleantechies.substack.com forward slash subscribe and become a paid subscriber. Any paid subscription gets you full access to the show on the Clean Techies sub stack. Hey everyone, welcome back to the Clean Techies podcast, the number one podcast for climate tech entrepreneurs around the world. I am your host today, Silas Maynard.

And we have a really, really fun episode for you. But before we get into that, I do want to ask if you are not already a subscriber on YouTube, please go to our YouTube and click Subscribe. If you're a fan of what we do and this work here and you're not already a paid supporter, this is a great way for you to help us out. It takes about 10 seconds. Just grab your phone, click on your podcast player and click the first link in the description. It will be the YouTube unless we mess it up on the the show notes afterwards and just give us a subscribe there.

if we can get to a higher number of subscribers that will help us with the growth of the show and the discoverability. So again, if you enjoy it, take 10 seconds out of your day to help us by subscribing on YouTube. All right. So today we are speaking with Danny Liu of Powen. This is Powen, the battery energy storage system developer. So the company actually has a really interesting history. They started out in the 80s by Danny's father. Originally, they were actually a contract manufacturer and made many, many different types of products.

But in 2010, when Danny got involved, they went all in on battery energy storage systems, right? This is at a time when energy storage systems were not exactly a big thing. It was very nascent industry. Not a lot of people were doing this. know, people measured projects in the kilowatts instead of the megawatts or gigawatts that we're talking about today. This is a really, really fun episode for many reasons. And some of the topics that we get to hear about are, of course, their story of that transition from being a contract manufacturer and building

a lot of different things to then building energy storage systems. One of them is also how the Trump tariffs are affecting the battery storage market. He has a lot of interesting things to say there about the demand for the energy storage systems that they're selling, but also how they're dealing with those, right? There's a lot of different things that they have to manage. And one of the other things I really found valuable, and I'm sure other hard tech founders are going to find extremely valuable, is how they got some of their first sales and their first contracts.

as an unknown name in the space, right? This is situation every hard tech founder is facing because you're not a reliable product yet. You're not something that has been on the market and a known name. So there's a lot of insights you can learn there. He also talks a lot about supply chain issues and how to deal with that as well as vertically integrating what they're doing. So many, many lessons for hard tech founders here today. I will point out as well, this company, the reason why you should care is they have over 8 gigawatts. 8 gigawatts.

of energy storage systems already built and I think 9 gigawatts in the pipeline to be built this year in 2025. So really incredible numbers here, a lot of great insights for you. And with that, enjoy the episode.

All right, we're live. Welcome to the pod. Danny, how you doing today?

Danny Lu (03:43)
Doing great. How are you doing?

Silas Mähner (03:44)
I am, I'm enjoying it, man. It's getting to be spring almost, like for the third time now in Wisconsin. I'm just hopeful that one of the days that the snow melts, it'll actually stay melted. Where are you calling from for people who don't know? Calling from Portland. Very good. Well, I guess give us a bit of an intro to who you are. Tell us who you are and what is Powen.

Danny Lu (03:59)
right now.

Yeah. Danny Liu, Senior Vice President at Palin, one of the founders of my family started the company back in 1989 actually. And we founded the company as a trading company and contract manufacturing company. know, finding customers in the United States, help them outsource their manufacturing into different parts of Asia. You know, lot of products that we built over time were, you know, fitness equipment. You know, we did a lot of

You know, treadmills, we did cooking stoves for camping. We've done a lot of products sold in Walmarts and Costcos over our years. But, that was kind of the more traditional business that, you know, my father started. But in 2010 is when we started the energy storage division of Palin, which was also around the time when I graduated college. know, my father and I started this, you know, energy storage division of the company.

right out of college. yeah, we ended up establishing our name. It took a long while to do so, but it was also a time where, you know, the storage market wasn't as defined as it is today, right? We were kind of creating new technologies that weren't necessarily widely adopted and we had to essentially create the market to do so.

Silas Mähner (05:27)
did the impetus come for that? was that something you just had an interest in? Because if I'm not mistaken, that would have been a time when clean tech was kind of like, hands off, don't touch it after the busts, if I will. tell me more about why you got into that.

Danny Lu (05:41)
Yeah, I think it was more so just a passion for renewable energy and knowing that fossil fuels are not going to be sustainable for human evolution moving forward. I think fossil fuels are definitely a big source of climate change as well as global warming, which we believe in. think really how Pallon started was we really had a passion for renewables.

Previously was always a behind the scenes company building products for other brands, right? We wanted to try to get out in the forefront and build our own brand within the renewable sector. What exactly at the time we didn't know, but I think, you know, it was through meeting different people throughout our previous business, you know, different companies that had different technologies. And we just so happened to meet some, you know, of our

future business partners in China. It just so happened to be an American creating battery technologies in China that, you know, started developing a battery management system, starting to develop, you know, battery packs that can kind of communicate with each other and all connected to the internet. And from that chance meeting that we had with that person, his name was Virgil Beeston, you know, that kind of spurred.

the ideation of what sector of renewable energy wanted to be, which was energy storage, and then kind of the basis of the technology that we wanted to build.

Silas Mähner (07:20)
Where

in the battery supply chain do you play? Are you guys kind of putting together other components making them into these just these storage packs or are you guys actually working on the battery chemistry yourself and building the battery cells?

Danny Lu (07:31)
Yeah, we don't design and build the battery chemistry ourselves. We like to rely on mature technologies within the lithium ion space currently. But, you know, the battery cells are what we consider a commoditized item where many different suppliers will build the same exact dimension, the same exact capacity of battery cell. And our job is to build the module and battery pack that the battery cells sit in.

but also all the controls and safety functionality that operate the battery cells and protect the battery cells. So that goes from cell, which is made by our suppliers. We create the battery module and the battery pack. We put our battery management system, which is our own IP on top of the module and pack, but then we design the racks.

that create battery strings. And then we also create the enclosures that the battery strings get housed in. And then all the DC and AC collection that goes into connecting all of those together and making sure they all communicate. They're all able to be monitored and controlled as well as communicating with the grid and the external SCADA systems. So everything outside and above the battery cell.

is designed and created by Pal and manufactured.

Silas Mähner (08:59)
Yeah, no, no, that makes sense. Who do you sell to? and what was I want to understand the evolution of this when you started? Because if you started in 2010, I'm assuming this was not a, this was not like a common thing that people were just, you know, buying these stacks of batteries to do, you know, utility storage, utility scale energy storage programs. So tell us more about what that was like and then, and who you sell to now. Yeah.

Danny Lu (09:20)
So

in the beginning, it was very unclear who are we going to sell to in what size of systems each of these types of customers wanted to buy. You know, we knew in the beginning that our technology was more suitable for large scale systems where you had to connect, you know, thousands of these battery strings together to make megawatt and megawatt hour scale systems. Right. But in the beginning, that market was not.

prevalent whatsoever. There's no projects in the beginning stages in the 2010 to all the way up to like 2015 era where the only market available was commercial industrial in California based on the SGIP incentives. In the beginning, we knew that there was this SGIP incentive that essentially offered 50 % of capital expense.

paid for by the government through a rebate program. And the only use that those systems could cover was demand charge reduction. Right. So, you know, Palin initially was knocking on facility doors, knocking on municipalities doors, trying to see which facilities they had high demand charges for, and then trying to predict when these demand charges would happen and how they're charged to then lower

utility bills for these types of facilities. You know, that was a much harder sale because your customer base was very wide, right? And you essentially had to knock on each facility's door, talk to the facility manager, and then get their utility bills and then try to analyze every single one, right? Where today, you know, the market is our customers, our IPPs and developers who are building large scale standalone or

you know, PV or wind coupled, you know, storage systems at 10 megawatt, you know, to start, you know, as years went on, they went all the way up to gigawatt scale systems, right? So the kind of who our customers are, are much more clear today than they've ever been. But there's also, you know, a very clear definition of what these customers expect from a supplier now when in the beginning it was Palin.

kind of creating that messaging, creating the market out of nothing, and then seeing if that landed with these customers who had never built an energy storage project, but had some aspiration to maybe be the first.

Silas Mähner (11:58)
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They even offer several tailored pricing methods. And guess what? It doesn't matter where you are listening to this. Goodwin is a global law firm that you can trust to be your partner through it all. From incorporation to exit, they've got you covered. Go to GoodwinLaw.com and tell them Cleantech is setting you to get exclusive access to startup resources. All right, back to the show. Yeah, that's fascinating. I can't imagine what it was like in the early days. mean, especially now we're so used to seeing such an infrastructure around everything, energy tech. It's, know.

2010 must have been, you know, like the wild west there. I want to understand how it was like for you, I guess, to step into this leadership role, you know, right out of university. And how did you manage that? Like what were some of the biggest challenges for you?

Danny Lu (13:10)
Yeah, I think luckily I had a very supportive boss who was my father, right? That had a lot of trust in me. Right. And given the early stage of the whole market in general, there was a few years to kind of study up what our technology was, figure out what the messages were, figure out what the advantages were. Right. And, you know, coming from university with no background in engineering.

Right. My major was international studies with a Chinese double major. Right. So, you know, I was really positioned to be kind of like an international business person, but then had to kind of jump in into this new market with a lot of technical aspects. Right. When I joined the company, I couldn't tell you what a kilowatt hour was actually, you know, but, know, luckily

You know, our CTO was very supportive and kind of took me under his wing. Really had a crash course of just being in charge of marketing at the time. That was my first position at Powen and just to kind of learn the tech, learn how to position it and really write a lot of content and copy and materials around what the actual benefit of this product was, where it could apply to and all the different areas that it could apply to. And then try to figure out.

where the incentives were, where the market was, and that evolved over time. But just being there at the early stage allowed me to learn on the go. But then, you know, having your father be the CEO, every time he got comfortable with one position, he wanted to kind of diversify my, my knowledge-based skill set. So, you know, once I felt super confident in marketing, we had to, you know,

acquire the land position. had to file the interconnection. We had to finance the project ourselves, but also bid on Southern California Edison's Aliso Canyon RFP. Right. And back in 2015, that RFP was like one of the first major storage RFPs that had ever come out. And it was really in response to a natural disaster that happened where the Aliso Canyon gas plant started leaking and emitting

pollutants into the atmosphere. The state of the governor of the state of California had to, you know, emergency shut down that facility. But in order to backfill the capacity back to a standard adequate state, they had to either build a new power plant or to build storage. Right. And the benefit of storage at that time was you can get through

permitting, interconnection, manufacturing, delivery, construction, and final acceptance of that project all within like a five month period. Right? So one of the firm requirements of that project was any bidder who won a project needed to not just build everything, permit everything, but they had to finish the whole project within six months. Right? And, and I think at the time that was really our calling, right? We were a manufacturing company that had

25 plus years of experience and building equipment and managing quality in China. But we just needed our shop to really prove that we could produce the equipment, prove that the equipment operated well, prove that we could get it installed and up and running before anybody else did. And we were the first to be commissioned within that realm.

Silas Mähner (16:54)
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If you'd like to learn more, check out our website, EarthTechTalent.com. That's again, Earth with no A. And we really value transparency, so our pricing is publicly available on the website. If you're looking for support, book a call today. My calendar link is in the description. And be sure to reference this ad for $1,000 off of your first search. All right, back to the show. Out of curiosity, I don't know if you know this now, but I would venture to assume that five months timeline to do that today is not possible, right?

Danny Lu (18:18)
Depends, right? Like, you know, there, there are definitely longer lead time items now because of the demand of storage is skyrocketed, right? But yeah, if you're building at the transmission level, right. And you have to get high voltage breakers and all this to help interconnect your system. Yeah. Those lead times are, you know, minimum one year or longer, right? But if you're distribution connected, you know, you don't have to have all this high voltage infrastructure that you have to buy.

It's more so standardized to just the battery system, the inverter, and those lead times could be delivered within five to six months, depending on how everything else in the project came together.

Silas Mähner (19:01)
That makes a lot of sense. guess I am curious about the – you mentioned a little earlier that it was about getting the utilities to trust you and understand like, why should we work with Powen? I'd like to know now what are the core things that are, guess, important to a utility or to an IPP when they're picking a project or somebody to provide the energy storage system?

Danny Lu (19:27)
The number one thing is you have to be accountable, right? Like you're, you're the company putting all these different components together. And if a utility were to separate that procurement, where if they wanted to like buy the batteries from one company, buy the software from another company, buy the inverter from another company, like they would need to put all that together and there will be not one single point of responsibility and accountability. Right? So, you know,

The way Palin needed to position ourselves is we're putting these whole systems together. If anything goes wrong, you can point your finger at us and we'll need to solve the problem. Right. think ultimately you have to provide a simplified solution to something that if they wanted to do that, do it themselves, anything to go wrong. And any of these suppliers if separated would just blame the other one for things not working. Right. So I think at the time it was just, how do we integrate a package very tightly together?

But how do we take responsibility for anything and everything that could go wrong with project? I think the other thing was really to establish our record and safety, right? You know, at the time, Samsung and LG were the leaders. know, they were building essentially EV packs on these energy storage racks. And they would just take the same exact battery management system from an electric car. They would take the same exact battery.

from the electric car and they wouldn't do that much engineering to make it customized for storage. Everything that we were developing at the time was utilizing a chemistry that wasn't widely used by storage at the time. It was lithium iron phosphate LFP chemistry, which is now the leader in storage deployments. Palin was one of the first to use that chemistry and establish it as.

the preferred chemistry for safety for energy storage. The reason why is because we've done a lot of analysis on different chemistries of batteries. And what we found was that lithium iron phosphate has a much higher temperature that it takes to reach thermal runaway than the NMC or LCO chemistries that are used by the EV producers. So, couple the very high temperature

you know, thermal runaway rate with kind of the reaction to once a cell reaches thermal runaway, the reaction of LFP was much lighter and it was more of a venting of gas rather than a fire or explosion. Right. so, you know, we've took a lot of data from our suppliers and compared it to data from the NMC and LCO suppliers.

and we kind of put a package together that compared the two. And since no one was really using LFP at the time, we were pioneers in establishing ourselves as leaders in that realm. Right. But then one layer on top of that is we had a very customized battery management system that was fully developed just to integrate battery storage together. You know, it wasn't a repurposed technology that took

electric vehicle, BMS and management, which is a much different way of managing batteries. Right. When you're driving a car, you know, most likely you're not going to be going from a hundred percent capacity driving it all the way down to zero and one go. Right. And typically when you're driving the car, the second you put the brake on it, it regenerates power, right. Where in a lot of storage use cases, you're, you're providing capacity just

all the way from a hundred to zero. So the way that not just the chemistry of LFP worked, it allowed you to go, you know, 3,500 cycles at the time was, the industry standard, but it allowed you to go from a hundred percent to zero percent back up to a hundred full a hundred percent depth of discharge without impacting your total cycle life, which was 3,500, right? About 10 years of use.

But if you were taking the same electric vehicle battery and you were cycling it zero to a hundred, zero to a hundred, without leaving a buffer 10 % of the top 10 % at the bottom, your cycle life would decrease from if you left that buffer, you would have 3000 or 4000 cycles. If you took out that buffer, you would have something like 700 cycles. Right? So, so the chemistry was a big part of it, but then it was the BMS that had

very unique monitoring features down to the cell level. But we also had very unique battery balancing features that utilize auxiliary grid power to perform our active balancing within the system. Because storage is always connected to an auxiliary power source or most of the time. When you're driving your car, you have no auxiliary power source to perform any battery balancing. Right? So there's just an inherent difference in how

cars operate and how storage systems operate, which we were able to establish an early, you know, adoption for.

Silas Mähner (24:49)
Climate Tech founders are taking on a huge challenge. Not only do they need to know how to build a startup, but they also need to deal with hardware, have a strong handle on climate policy, know how to fundraise from diverse investor types. It's a lot. That's why we make Clean Techies, the number one podcast for climate tech entrepreneurs. In addition to our jobs, we devote 20 hours a week to producing this podcast for you. This way you can learn from the people who have walked the path before you.

learn from their mistakes and gain insights on navigating this complex journey. If this mission resonates with you, we are asking for your help. It takes a lot of effort and it's not free. If you are already a subscriber and want to help, start supporting us today by going to Substack and clicking Upgrade to Paid. Thanks for helping all the climate tech entrepreneurs like you. Yeah, that makes a lot of sense. I guess I also would like to understand where is power at today in terms of scale? you know, I don't know if you just talk about market share or how many projects you guys are typically installing.

Any more?

Danny Lu (25:44)
Yeah. So cumulatively, we currently have 8.8 gigawatt hours of systems online and connected to the grid and operating. We have about nine more gigawatt hours that are currently in construction or commissioning phases or, you know, manufacturing phase. So in total, cumulatively, about 17.5 gigawatt hours of systems that will be installed by, you know, sometime in 2026, you know, per year.

I feel like every year since our beginning, we started with a couple hundred kilowatt hours in 2014, but every year after that, we felt like we've had 1000 % growth for one year and then 400 % growth for consecutive years. kind of today, we're building about this year, 2025 alone, I think we're bringing online about eight gigawatt hours in itself.

There's a lot of changes in the market, but also the growth of power is really just following the growth of the industry as a whole.

Silas Mähner (26:52)
Speaking of market changes, guess, what is the outlook right now in terms of like, are people still looking to build more energy storage? Are they cooling it off? Like, what does that look like?

Danny Lu (27:02)
I

a lot of our IPP and developer and utility customers are all very interested in building more storage projects. I think the one thing that is withholding the growth, you know, where, you know, at least in kind of market research projections, 2026 might become a, the first kind of down year in storage. And a lot of that can be attributed to volatility and tariffs, right? And, you know, since

these projects, you have to sign the project and then deliver it within a kind of one year period. say if. Tariffs change after you sign that contract, you know, it's very, you know, someone needs to hold that risk, right? If unforeseen tariffs get implemented, does the supplier take that risk? Does our customer take on that risk or does the end customer take on that risk? Right. And I think naturally right now.

A lot of the customers are trying to push that all on the supplier, right? And certain suppliers could take it. Certain suppliers may not, right? Depending on whatever situation. But, you know, I think in general, there's a lot of tension right now in the industry, a lot of concern about instability of costs, you know, not being able to fix the price at contract signature and needing to float the price based on change in law risk, right?

And I think that is a huge part of why there are a lot of projects that were aimed to be installed in 2026 might get pushed out to 2027. Right. And I think that's just a general trend that's happening now in the space. A similar thing happened a few years ago where it wasn't just the first tariffs that were implemented back in the first Trump administration, but also there was a lot of volatility and

and the lithium carbonate, which is the, you know, the lithium iron phosphate, you know, chemistry, that commodity, you know, lithium carbonate increased by about over 700 % within a six-month period. And that shock of price increases were unforeseen where all of the supply agreements that Palin had signed were all fixed price agreements for a three-year period. As soon as that law

started happening, that is when, you know, customers started pausing, right? And customers needed indexation formulas and no prices were able to be fixed until essentially the battery cells were manufactured, right? So I think those two, commodity risk and tariff risk, were really the main proponents of why energy storage market had slowed for a period of time and is slowing again now.

Silas Mähner (29:57)
To clarify then, the reason why the hesitancy is because with the tariff that would increase the cost of the project, meaning the, I guess it wouldn't be considered levelized cost of energy. don't know if that's right term here, but basically the cost to develop a project is higher and therefore somebody has to foot the bill likely.

Danny Lu (30:14)
Exactly. So these storage systems are 20 year infrastructure assets that operate under a probably 12 to 30 % IRR, depending on what the project is and where it's located. So if you're making your return of sometimes 10 % at highest 30 or so, a 27.5 % tariff for this year, it might

you know, kill the whole project, right? And then adding another 25 % on for 2026, bringing the total tariff to 52.5, right? That would more so, you know, kill the projects. So, you know, if, if you're not able to control the tariff risk, you know, it's very hard for our customers who are working off of long-term interest and returns.

to justify a 27.5 % tariff increase on the batteries equates to about maybe a 10 or 15 % increase on the total capital expenditure in project.

Silas Mähner (31:25)
What is the demand for AI and guess data centers all around the place popping up? What is that? How does that play into the demand for energy storage generally and will it just outpace even the fact that there's tariffs or are people going to be willing to pay enough just for it anyways?

Danny Lu (31:41)
Yeah, I definitely believe that AI and data center growth is going to be a huge part of energy storage, but also renewable energy market growth. A lot of these data centers are planned to be developed over the next few years, we're currently in construction. I think the ones that may need faster storage will still move forward with

the data center in the current time frame and the storage system. But I think a lot of these future plans are still pretty tariff dependent. You know, I think the main use case for data centers and storage, one of them is just depending on how your energy is kind of your utility bills are structured, right? You could have peak times and off peak times of much energy costs, right? And some places have two peaks in a day.

Some places have a longer peak, right? Which typically is four hours, sometimes is expanding to six. So storage is able to kind of charge the energy and when it's off peak, discharge it out reliably and consistently when it's on peak, know, thus saving, you know, big spread energy costs. I think other reasons for storage is to provide power reliability, right? If the grid has some frequency variations or things, we need to be able to keep that energy.

stable to use consistently by the data centers. You know, one other aspect is some of these are kind of 24 hour fully renewable energy powered facilities that have private kind of wholly owned offtake, right? Where they build the data center and in conjunction with it, they build megawatts of solar, megawatts of wind. In that case, you need the battery to kind of balance out that intermittency for

You know, when the sun goes down every night, you need to have a power source. When the wind stops blowing, you have to have a power source to keep that going. So storage will definitely play a huge role in fully off-grid or 100 % renewable data centers, but also with the trend of green hydrogen and green ammonia production. A lot of those facilities are in remote locations that will also need to be powered fully by renewable energy. And in that case.

You may need gigawatts of storage, gigawatts of renewable energy power just to make those plants function.

Silas Mähner (34:11)
Yeah. Earlier you mentioned that utilities or IPPs have a certain kind of you know, harsh deadline where you got to deliver these projects. And if you guys are sourcing and doing a lot of this stuff overseas, I'm assuming you learn a lot about procurement and supply chain. Could you share some of those lessons and learnings for other people who might be dealing with this? Yeah.

Danny Lu (34:30)
I would say a lot of the supply chain of storage is based out of Asia, right? Whether it's China, Korea, you know, Japan. So, you know, from 2017 to about 2021, you know, I was leading procurement and sourcing at Powen, right? A lot of that was really trying to figure out who, number one, who would sell you product, right? As a no-name kind of startup at the time.

we didn't have the reputation as many of our competitors did, right? So one, we had to really put on our sales hat when we were doing procurement at the time to pitch the story of Pound, pitch what the advantages were to get these larger battery companies to buy into why we were a potential large customer for them, right? So, you know, at the time we weren't able to buy from Samsung or LG, even if we tried.

They didn't see a value in selling batteries to us back in our early stages. So we had to rely on Chinese suppliers that wanted to, you know, get their technology out of China and implemented in the United States. And, you know, we were finding companies that were more hungry to work with us. Right. And as you know, this is a very competitive market. It was back in that time, too.

We were lucky to be able to find certain suppliers through very hard work and research to essentially provide us with the most competitive pricing that anybody's ever seen on the market, but at a fraction of the volume commitment that some of the larger players were asking for. So when we built our first project, the one in Southern Kyle Edison, we found one supplier that was willing to give us

one year deferred payment terms on that project where we didn't have to pay a single cent until everything was delivered. And then another nine months after that. Right. So like that really helped us grow. That helped reduce the amount of investment that we needed to fund the project. But it also gave them their first megawatt scale project in the United States, which was hugely important for them. Right. So it was kind of a win-win for everybody.

But then as Powen started growing, this company actually became one of the premier suppliers for energy storage. We introduced so many of our customers to this company. brought 10 or 20 visits from these international IPP and utility companies out to China to visit this one random factory in a random city in China. So we kind of showed

the whole energy storage market that even though these are kind of newer battery factories that started up two years ago, they were building state of the art facilities, fully automated, maybe even more automated than some of the incumbent players had. So, you know, we really kind of opened the door to the market to show the capability of some of these up and coming Chinese battery companies that we're building.

very innovative technology, very innovative cells and had very high quality control. Right. And as Palin grew, our demand increased significantly where then we could start, you know, attracting some of these more tier one, more bankable, larger battery players, which was also part of our strategy. You know, we needed to use the tier twos to get our name out there, get the price where it needed to be, get our terms where they needed to be. But then once we

had healthy pipeline and backlog, we were closing deals, then we could start utilizing on some of these larger players that had more of brand name and more balance sheet for us to work with.

Silas Mähner (38:30)
So I just want to kind of highlight that I feel like the lesson to draw there is that you, when you were a small player, a small fish in a big pond, you figured out partners that also had an incentive to be able to work with you. They're willing to give you those favorable terms because they were trying to get their name in the map similar to you. And you found ways around it by becoming really familiar with the market. I think there's going to be over the next coming years, there's many, many cleantech startups who are going go through a similar situation.

You know, one thing we have to talk about it, because it's kind of like the elephant in the room here is if, you know, there's a huge push right now in the U S to manufacture in the U S right. At least that's what it seems like it, there's not a lot of consistency, but that does seem to be one thing that's, you know, relatively straightforward that they want to do. What is, what does that look like for power? Are you guys really considering like, should we, should we make kind of two options here? Should we bring some of this on, on shore? Like how do you look at this?

Danny Lu (39:23)
I strongly believe that if they were more open to Chinese companies coming in and doing that factories could easily be built in a matter of maybe two years, three years max. But because of all these restrictions, we're only seeing like the Japanese and Korean companies being able to play risk-free. I really think that the adaptation or how much the market is evolving, you have to be very nimble and you have to change your direction according to where the market is

Silas Mähner (39:52)
Hey everybody, this is the end of the free version of the episode. If you'd like to get the rest of the discussion where we cover what the tariffs are doing to the demand for the energy storage systems in the US, how data center growth actually playing a role in that demand, whether that's positive or negative. You'll have to find out if you become a paid subscriber and Danny's core lessons about supply chains. also, we spent a bit of time speculating on will the US invite China to build some of their US based facilities?

to build some of the facilities in the US and help Americans get jobs with this new technology. And then we also discussed, and I think this is perhaps the most interesting thing, based on some of the mistakes that Powen made early on, what are the lessons that Danny has for other cleantech entrepreneurs? So the rest of the show is really, really, really great. If you'd like to hear it, all you have to do is go to cleantechies.substack.com forward slash subscribe and pick a tier that works best for you. It's $10 a month or $80 a year. So head on over.

And you are interested in becoming a paid subscriber, I wouldn't dilly dally because on May 1st, the annual subscription cost is going to go up to $100 a year. All right. We hope to see you on the other side.