Energy Storage Co. Pioneers Utility-Driven Energy Shift

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Eguana Technologies Inc. (EGT:TSX.V; EGTYF:OTC) announced its annual financial results for the fiscal year ending December 31, 2024.

Throughout the year, Eguana said it shifted its focus from consumer-driven rooftop solar markets to utility-driven grid infrastructure channels. This strategic pivot was aimed at harnessing Utility and Distributed Energy Resource Management Systems (DERMS) partnerships in anticipation of advanced batteries becoming essential for transforming power grids into distributed networks.

Advanced battery solutions, especially those implemented behind the meter, are crucial for enhancing the capacity and reliability of existing grid infrastructures, the company said. These solutions enable utilities to more effectively manage edge-of-grid generating assets and renewable energy sources such as wind and solar, while also providing consumers with backup power during grid failures.

Eguana's suite of hardware and software solutions is tailored for utility-level power grid management and includes comprehensive Virtual Power Plant (VPP) capabilities. These capabilities encompass demand response, voltage and frequency control, backup power, fleet aggregation, spinning reserve, and real-time grid edge visibility and analytics.

"2024 witnessed the continued downturn of consumer-driven rooftop solar markets and catalyzed a strategic acceleration for Eguana towards utility-driven channels, focusing on the power grid transition and a distributed grid," Eguana Chief Executive Officer Justin Holland said. "Our hardware and software solutions, designed for delivering grid services at the grid edge, are now crucial as utilities increasingly invest in necessary deployments. Our technology distinctly excels at the utility level, providing the much-needed capacity and reliability to the existing grid infrastructure."

Eguana's Evolve hardware and its Cloud and Edge software platforms offer real-time management and visibility solutions at the grid edge for utilities and DERMS partners. As the power grid evolves into a distributed network, energy storage assets will play a pivotal role in grid management.

Strategic Highlights

In the release, Eguana recounted some strategic highlights from the year, including the successful integration of its hardware and software solutions with five leading North American DERMS providers, the execution of pilot demonstrations for feeder voltage control under high photovoltaic penetration conditions with a western Canadian utility, and delivered an exclusive megawatt feeder peak management project for that same utility.

The company also completed demand response testing with both single systems and aggregated fleets in collaboration with a California-based DERMS partner and Community Choice Aggregator, aiming to enter the California demand response market; achieved system integration with Itron Intelliflex smart meter 2.0, marking the first smart battery/smart meter combination, and was invited to participate in a 4MW feeder support RFP by the largest Ontario Local Distribution Company (LDC).

A feeder pilot is planned with an Alberta-based utility to showcase the delivery of stacked services from residential storage in a competitive electricity market, Eguana said.

Fiscal 2024 Highlights

Some highlights of the fiscal 2024 results include:

- Operating costs, excluding amortization and share-based compensation, decreased by 51% year-over-year to CA$5.25 million.

- The company recorded a credit loss recovery of CA$1.6 million, a significant improvement from the previous year's credit loss provision of CA$10 million.

- Sales plummeted by 92.3% to CA$751,869, influenced by economic uncertainties and a reorganization of global supply chains.

- Gross margin fell to negative 29%, reflecting industry slowdown and heightened price sensitivity in consumer markets, compounded by inventory impairments.

- Net loss before tax from continuing operations reduced to CA$15.2 million, down from CA$32.4 million, primarily due to significant reductions in operating expenses.

- The company decided to close its German business and liquidate its Australian subsidiary, with net losses from discontinued operations totaling CA$380,000 for the quarter ending December 31, 2024.

A 'Groundbreaking Approach' for Future Energy Management

Eguana is leveraging its virtual power plant (VPP) technology to transform residential and commercial buildings with smart batteries into active components of the power network.

VPPs integrate these smart batteries, located at the edge of the grid in homes and businesses, with software that efficiently manages the storage and distribution of energy. This system stores excess energy and dispatches it during peak demand periods. "The process is seamless to the consumer," stated Justin Holland, chief executive officer of Eguana.

Recently, the Canadian electric utility company British Columbia Hydro and Power Authority, commonly known as BC Hydro, launched a project to convert homes into VPPs using battery storage systems provided by Eguana. BC Hydro's Peak Saver project aims to deliver uninterrupted power supply to its customers while enhancing the grid's flexibility. The system allows the batteries to switch to backup power during outages and supply energy during peak demand times. BC Hydro remotely manages the Eguana Technologies Evolve LFP 14kWh/5kW batteries to ensure they perform optimally when demand is high.

Adrian Dix, the Minister of Energy and Climate Solutions for the province, called VPPs a "groundbreaking approach to test the future of energy management and build a more resilient, efficient, and sustainable power grid overall."

BC Hydro highlighted that by modulating energy consumption, participants not only help reduce system demand but also earn financial rewards. The initiative includes incentive options like the Peak Saver Challenge and enrollment in smart home devices such as thermostats, electric vehicle chargers, load controllers, and home batteries.

Each installed system contributes monthly recurring revenue to Eguana through its integrated software and hardware platforms. The Evolve hardware is paired with Eguana's Exchange and Edge cloud platforms, facilitating system-level control through a Distributed Energy Resource Management System (DERMS). The utility's DERMS software partner coordinates the charging and discharging cycles to support grid stability.

In addition to developments in British Columbia, Eguana has recently completed fleet-level demand response testing with a utility retailer in California and is finalizing plans for a summer rollout in Alberta to support a constrained feeder. The company has also submitted a proposal for an upcoming utility program in Ontario and continues to showcase its technology in demonstrations across Vermont, Oregon, and Nova Scotia.

Holland said he has observed a growing interest in integrated battery and DERMS solutions among utilities, noting, "We can certainly feel a change in the air as more utilities move towards advanced batteries to manage near-term capacity and demand peak constraints on the grid."

Analyst: Advantages of Grid Transformation 'Will Be Huge'

*Technical Analyst Clive Maund has commented on the company's prospects, stating, "The rickety traditional centralized grid structure is at or close to its limits and requires transformation. The advantages of this transformation will be huge — a massive increase in capacity, vastly more efficient utilization of power generated, decreased demand on centralized power generation, and protection of the end user, corporate or private, from power outages."

Maund said he views the stock as having an "exceptionally positive risk/reward ratio" and rates it a Strong Buy for all time horizons, with price targets ranging from CA$0.20 to CA$2.

The Catalyst: Powering the Energy Transition

The U.S. is in dire need of every available unit of energy as the demand for electricity is increasing for the first time in years, as reported by NPR's Michael Copley on March 12. To meet this demand, there is a push to accelerate nuclear and geothermal projects, increase the use of natural gas, and, in some cases, delay the retirement of old coal plants.

However, the pursuit of electricity also heavily relies on renewable energy and battery facilities, which are crucial due to their ability to be quickly constructed and their provision of relatively inexpensive electricity.

Yet, the renewable energy sector may face significant challenges, as noted by Copley. The Trump administration has attempted to withhold federal funding previously designated by Congress for climate and clean energy projects, including solar and wind energy. Furthermore, Trump has directed the government to temporarily cease issuing or renewing leases for offshore wind projects in federal waters. The Department of the Interior has also limited the officials within the agency who can issue permits for renewable energy projects on public lands, which could slow down the permitting process. Additionally, conservative lawmakers are pushing for the elimination of tax incentives for clean energy. These disruptions could lead companies to rethink their strategies for constructing new power plants, potentially stalling economic growth and affecting efforts to develop data centers for AI — a primary focus of the Trump administration.

Ownership and Share Structure

According to the company, about 0.5% is owned by management and insiders.

24.6% is held by the Japanese ITOCHU Corp., the company said.

The company's market cap of CA$3.61 million, according to Refinitiv. Its 52-week range is CA$0.05 and CA$0.20.