We're introducing a new feature to our blog. From time to time we intend to write about companies that we feel are strategically well positioned, are near the point of capitalizing on their strong position and have recently added to their management teams. The first in this series of write-ups is VRB Power Systems, Inc., of Richmond, BC, Canada.
Recently, we interviewed Justin K. Lacey, VP of Sales and Marketing at VRB Power Systems. He joined the company in March of this year after more than 10 years at Bombardier, a company with 60,000 employees and $20 billion in sales. At Bombardier he served as VP for marketing and sales in the business jets division. His focus there was to build the company's brand and increase sales in international markets. At VRB, he looks forward to applying many of the lessons learned in his big company experience to creating success in a much smaller company on its way to becoming a large one.
The markets for VRB Power Systems product, VRB-ESS, an energy storage system featuring a flow battery using vanadium-based electrolyte, may be near a growth inflection point where a few large orders lead to higher volume manufacturing and reduced manufacturing costs, lower selling prices, which in turn lead to increased market share and additional new orders.
The overall market for energy storage in the USA is estimated to be about 10GW per annum until 2010 (Distributed Utility Resources, Wachovia Securities 2002 energy report, et al) and over 100GWh. This includes applications of energy arbitrage, power quality and load leveling (peak shaving). Using these figures and a projected sales price for the VRB-ESS of $450/kWh, the market potential is estimated at approximately $4.5 Billion/year. [DOE estimates of market benefits are $3.8 Billion/year and Pearl Street $11 Billion/year]
VRB Power Systems' proprietary technology (20 - 25 patents) has attracted selling agents around the globe. The company's own sales force has had good success booking orders from telecommunications companies using VRB-ESS to power remote transmission and receiving stations. The competing technology for the telecommunications market is lead acid batteries. The company has received an order from the US Department of Energy to build, together with Chevron Energy and others, a demonstration solar and wind power system in the Santa Rita Jail in Northern California. The competing technology for these large wind farm and solar projects is either zinc bromine or sodium sulfur batteries. The company's vanadium based system competes favorably with these alternatives because of its capacity for a high number of charge and discharge cycles and because it relies on relatively benign materials for its technology.
Longer term, the company has plans to establish VRB-ESS as the brand to turn to for energy storage systems worldwide. Also, the company has the intention and ability to enter the very large market for electric power load leveling and peak shaving systems. So, the market opportunities for VRB-ESS are varied and potentially enormous, but will require achieving the right cost/benefit relationship to fully exploit. On the other hand, wind and solar farms are large markets that already can use a VRB-ESS type solution in order to deliver on their potential as steady, reliable power sources.
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