The rapidly expanding home energy storage sector is in flux. Mercedes Benz Energy recently announced that it was leaving the residential energy storage market to focus on the automotive business.
Tesla Inc. (TSLA:NASDAQ) is ending its partnership with Home Depot and will remove kiosks promoting its Powerwall and solar energy in some 600 stores. This does not mean, however, that the company is shrinking its energy storage business and plans to sell its products in Tesla stores and online. Buried in its First Quarter earnings letter that the company released in early May, Tesla stated, "2018 should be a very important year for our energy storage business. We continue to aim for a three-fold increase in MWh deployed for our energy storage products this year." In the first quarter of 2018, energy storage deployments grew 161% from the previous quarter, to 373 MWh, and the company sold a record number of residential Powerwall systems, and still has a backlog of deliveries.
Sonnen GmbH, a Germany-based manufacturer of energy storage systems and EV chargers, secured a Ä60 million financing round that was led by oil behemoth Shell, through its New Energies division. Sonnen is partnering with Shell to develop "innovative integrated energy propositions, enhanced EV charging solutions and the provision of grid services that are based on Sonnen's virtual battery pool."
Another energy storage firm with a lot of upside potential is small-cap Eguana Technologies Inc. (EGT:TSX.V; EGTYF:OTCQB). The company recently announced that Mercedes Benz Energy (MBE) has endorsed its products for home storage and it recommending that distributors "source residential energy storage products directly from Eguana."
Eguana's products have gone through extensive testing by MBE. "We ran the Eguana through 6 months of intense testing to ensure reliability and functionality," stated Gordon Gassmann, CEO at Mercedes Benz Energy. "We are confident the product is right for the markets, and are happy to transfer our distributor relationships directly to Eguana."
Eguana has been working with MBE for some time. "Under the original private label agreement all systems were destined for the Australian market, however with this transition Mercedes has opened additional markets for Eguana's Evolve and other product lines," commented Justin Holland, Eguana Technologies CEO. "MBE sales worked with us to transition additional distributors in Australia, Europe, Africa, and the Middle East. We are very excited to see our products move into this rapidly expanding distribution network."
The company noted that it has "added multiple distributors across noted regions and as a result expects sales projections to increase as additional distributors are contracted. Initial product roll-out, which was planned to begin in June, is expected to take place throughout the fourth fiscal quarter."
The energy storage markets are exploding; according to Frost and Sullivan, the residential battery storage market is expected to grow from a market of US$744 million in 2016 to US$3.6 billion by 2022. In Australia, a key market for Eguana, 2017 residential installations tripled to 21,000 systems and the market is forecasted to double again in 2018.
In Europe, energy storage growth rates are expected to maintain a 45% increase; in Germany alone over 80,000 behind the meter batteries have been installed to date, according to Green Tech Media.
Even before this announcement, Eguana has been on a significant growth trajectory. At the end of May the firm announced that its continued "shipments into the Hawaiian residential market resulted in energy storage system revenue of $2.4 million CAD, representing a +400% increase for the six months ending March 31, as compared to the same period in 2017." Green Tech Media reports the U.S. market will nearly double again in 2018 to over 1,000 mega-watt hours.
This rapid growth has caught the attention of industry watchers, including Mackie Research analyst Nikhil Thadani. In a June 20 report, he noted that Eguana "received a full engineering report and endorsement of its Evolve product from Mercedes Benz Energy detailing all test and field results, which is an important validator for EGT's solution as MBE will transfer distributor relationships directly to EGT."
Thadani expects Eguana to establish additional distributor relationships, as this "announcement opens up a path for distributors in Europe, Africa, and the Middle East. Additional geographies could increase C2019 addressable market by ~70% per our discussions with management. EGT has already added multiple distributors globally."
Thadani also stated that he expects calendar 2018 revenues to be greater than $10 million, "if this strategy plays out successfully."
Mackie Research has a Speculative Buy rating and $0.70 target on Eguana, which is currently trading at around $0.23.
Alex Koyfman wrote in Penny Stock Millionaire on June 1 that Eguana "released a pretty spectacular corporate update earlier this week, including revenue growth of more than 400% over the previous six months." The company's stock, he noted, has "not responded efficiently to this update, despite the eye-catching revenue growth. We're still trading at $0.20 (CAD). There is more to come, however, and the potential, with the shares at a historic bargain, is greater than ever."
Technical analyst Clive Maund charted Eguana and concluded that "Eguana is in position for another rally, so holders should stay long and the stock is at a 'buy spot' again here." Eguana's shares at that time was trading at CA$0.26. It is currently trading at CA$0.23.
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1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Relevant disclosures required under Rule 3400 applicable to companies under coverage discussed in this research report are available on our web site at www.mackieresearch.com.
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The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
Clive Maund: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None.