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Southern California’s grid needed help in the fall of 2016. The region was still reeling from the calamitous Aliso Canyon gas leak, and its power plants faced a potential shortfall of that fuel to meet air-conditioning demand when the next summer rolled around. The state took a chance on a new grid technology, lithium-ion batteries, to fill in the gaps.
Big names like Tesla and AES stepped in to help, installing storage at record speed, but so did a little-known firm called Powin. Joseph Lu had founded the Oregon-based company years earlier to import consumer products from China and Taiwan. Sensing a new business opportunity, Powin won a bid and installed 2 megawatts of batteries in a warehouse it owned in Orange County.
This proved to be a launchpad for the firm, which rose to the upper echelons of the booming U.S. battery industry before crashing down to earth last month.
After that Orange County installation, Powin refocused on importing battery cells from China and integrating them into grid storage systems, fully packaged with inverters, controls, and safety systems. Powin went on to deliver battery enclosures for many pathbreaking projects: It supplied the first utility-scale battery in Mexico, a landmark utility-endorsed battery fleet in Arizona, and a truly mammoth system in Australia, to name just a few of Powin’s self-reported 11.3 gigawatt-hours of installed systems. It raised some major outside equity rounds to keep growing and last fall obtained a $200 million debt facility from investment giant KKR.
And then in June, Powin filed for bankruptcy, alerting the state of Oregon of mass layoffs at its Tualatin campus, outside Portland. The news jolted the storage industry, since so many major grid storage plants run on Powin’s hardware and software. The bankruptcy proceedings are ongoing, but storage software specialist FlexGen has placed a bid to buy Powin’s assets at auction in early August, offering Powin customers a way to keep their batteries running.
Cleantech bankruptcies have flourished under the second Trump presidency, and the storage sector is uniquely exposed. The industry runs almost entirely on imported battery cells from China, making it vulnerable to rapidly shifting trade policies. The Biden administration raised tariffs on Chinese batteries, and President Donald Trump cranked the overall rate on Chinese imports as high as 145% in April, though he has altered the rate repeatedly in the opening months of his presidency. Trump’s budget law preserved tax credits for installing grid batteries but added a new bureaucratic regime to regulate the amount of China-derived equipment in those storage plants.
“The business model of integrating batteries into a full storage system is one of these classic high-volume, low-margin businesses,” said Pavel Molchanov, a Raymond James analyst covering cleantech companies. “Margins were low even before Trump and these new tariffs on China, and now it’s a safe bet that their margins have been squeezed even further.”
Nonetheless, Powin’s collapse stands out for the scale of the company’s reach — and raises serious questions. Is Trumpian chaos enough to unseat a leading battery supplier, even as the market for grid batteries continues to surge? Or did Powin’s leadership make choices that ultimately led to its early demise? And perhaps more important, what’s going to happen to those 11.3 gigawatt-hours Powin installed before it went bankrupt?
Powin got to the big leagues by spotting technological trends before they hit the energy-storage mainstream.
That started with the rapid-fire California installations in 2016, when hardly anyone was building large-scale storage. At the time, American developers looked to a handful of Tier 1 battery suppliers, like LG, Samsung, and Panasonic. Powin instead scoured China for manufacturers that American buyers hadn’t discovered yet but that could match key quality metrics. Powin signed an early supply deal with a firm called Contemporary Amperex Technology Co., or CATL, which has since become far better known in the West as the world’s largest battery maker.
Powin also focused on the then-lesser-known lithium ferrous phosphate (LFP) chemistry, which executives hailed as safer and longer-lasting than the mainstream nickel-based chemistries handed down from the electric vehicle supply chain. Powin imported these LFP cells from trusted vendors in China, installed them in engineered metal cabinets in Tualatin, then delivered them to project sites across the U.S. and, later, the world.
By the 2020s, U.S. storage installations were growing at a shocking rate. To keep pace with soaring demand, Powin raised $100 million in February 2021 from investors Trilantic Capital Partners and Energy Impact Partners, followed by $135 million in 2022, led by Singapore’s sovereign wealth fund GIC.
The firm’s first major public setback came when a Powin-supplied battery system in Warwick, New York, burst into flames after a summer storm in 2023. Days later, authorities responded to fumes emerging from another Powin-supplied system in that town.
Developer Convergent Energy and Power owned both systems, and its investigation concluded that a manufacturing flaw in that generation of Powin’s Centipede battery container let water leak in and start electrical fires. Those incidents prompted the Warwick Village Board to freeze local battery development, and they undercut Powin’s reputation for safety, which the company previously had promoted after other companies’ battery fires elsewhere in the country. A spokesperson for Convergent did not respond to requests for comment.
It’s unclear what kind of financial impact the fallout from those fires had on Powin, but the firm subsequently found itself locked in a legal dispute with none other than its longtime supplier, CATL. That company sued Powin in Oregon Circuit Court in December 2024 for $44 million in allegedly unpaid bills, following an earlier arbitration on the matter in Hong Kong.
The circuit court noted in February that Powin “does not deny that they owe money to CATL” and that “it is apparent to the court that the amount of money Powin owes to CATL exceeds the value of the assets Powin holds in Oregon.” That’s not a great sign for a company’s metabolism.
In a subsequent filing, Powin’s lawyers asserted that, actually, CATL was refusing to honor the contracts and instead tried to spring non-contracted price hikes at the last minute: “CATL effectively held Powin hostage to choosing between negotiating a solution with CATL or breaching contracts with its customers.”
In the same suit, the Powin lawyers proposed a nefarious explanation for the souring relationship with CATL, one that sheds light on a broader challenge Powin faced in the maturing storage market.
“Powin finds it highly suspect that the timing of this filing for pre-judgment remedies comes as CATL is aiming to compete directly with Powin to supply complete energy storage systems, moving beyond its historical business model of supplying subcomponents to Powin and others like Powin.”
Powin championed CATL’s battery cells to the U.S. market when buyers still had hang-ups about sourcing high-quality batteries from China. But CATL, recently valued at more than $180 billion, did indeed move beyond simply shipping cells and began competing directly with Powin. CATL launched a containerized storage product in 2023, and in May it rolled out a new 9-megawatt-hour, double-decker grid battery enclosure called TENER Stack.
“The past few months have presented considerable headwinds for system integrators, even without considering company-specific challenges,” said Ravi Manghani, senior director of strategic sourcing at data firm Anza Renewables. “The increasing number of battery [original equipment manufacturers] entering the U.S. market with attractively priced DC blocks and AC solutions has put pressure on the traditional value proposition of system integrators.”
Other sources in the grid storage industry noted that Powin’s quality had suffered in the scale-up, lowering customer interest in its products. The company had always had a smaller balance sheet than competitors like Tesla, Fluence, and Wärtsilä, all of which are publicly traded and worth billions.
Longtime Powin CEO Geoff Brown, who led the company from 2016 through its dynamic growth phase, departed in 2023. He was replaced by Jeff Waters, who touted his leadership at solar panel manufacturer Maxeon during its spin-off from SunPower. Those accolades look less auspicious from today’s standpoint: SunPower went bankrupt last year, and Maxeon’s valuation has tumbled precipitously from its 2023 levels.
Last fall, Powin turned to the credit business at KKR, a private-equity trailblazer famous for record-busting leveraged buyouts like RJR Nabisco in the 1980s and utility TXU in the 2000s.
“The facility will be instrumental in supporting Powin’s working capital needs, driving continued innovation, and further enhancing the company’s financial flexibility as it expands its leadership position in the storage industry,” KKR said in a press release from October announcing the $200 million facility.
It’s a strange thing when a company that just secured ample working capital then runs out of working capital just a few months later. Sources familiar with Powin’s business said the debt package, paradoxically, hastened the company’s demise.
Powin drew on only about $25 million of the available debt, but the deal company leadership accepted was “very ugly” and “poorly structured” for Powin’s purposes, said one former Powin customer granted anonymity to speak on sensitive business matters. Another grid storage veteran, who also spoke on condition of anonymity, likened the situation to a payday loan: “They got upside down, and KKR called it in.”
KKR declined to comment on the specifics of Powin’s debt facility.
Powin wouldn’t be the first cleantech company that failed after getting behind on its debt payments. Major rooftop solar provider Sunnova increasingly turned to corporate debt to raise cash as the market soured, then struggled to find cash for debt payments and fell into bankruptcy in June. Electric bus maker Proterra piled up corporate debt before its bankruptcy filing in 2023. When it’s time to pay the tab, even a promising customer pipeline is no legal tender.
Powin’s financial collapse triggered an existential question for all the storage plants out there running on its hardware and software.
“Everyone’s trying to figure out how to maintain their products and solutions and not have bricked systems,” the former customer said.
Software needs updates, as anyone with an iPhone is repeatedly reminded, and the same goes for the systems that tell huge banks of batteries when to charge and discharge. Energy market rules change; hardware trips up. If Powin simply ceased to exist, it would jeopardize the reliability of all the critical power plants running on its control systems.
But those anxious battery owners may soon get some relief now that software startup FlexGen became a stalking horse bidder in June, proposing to buy “substantially all” of Powin’s assets for $36 million. It’s also lending money to keep Powin operating in the meantime. There will still be an auction, and other firms could bid more. But if all goes according to plan, this process will conclude by early August.
FlexGen CEO Kelcy Pegler said he had great respect for Powin, and “gratitude for them being an early mover” in the grid storage industry.
“Powin was such a substantial part of the market,” Pegler told Canary Media. “FlexGen’s interest is in making sure the customers have a successful path to continuous operations.”
FlexGen, based in Durham, North Carolina, employs some 120 software engineers to constantly maintain and improve its storage management software, Hybrid OS, Pegler noted; that product works on whatever storage hardware the customer wants to operate. If the bid goes through, FlexGen will first provide Powin customers with a “continuity plan” that keeps systems running as they are, and customers will have the option to sign new long-term service agreements with FlexGen.
Customers will have good reason to switch over to FlexGen’s flagship product, Pegler added: An independent market study by cleantech data firm Orennia found that batteries running on FlexGen software performed better than those running on that of Powin (and other competitors) in the wholesale markets of Texas and California in 2023.
As for the business of buying battery cells and turning them into storage plants, Pegler is happy to leave that to the existing field of storage manufacturers. He plans to stick to software and services.
Powin has let go of much of its staff. The founders will lose their stakes, and the venture capitalists and private-equity investors won’t rake in a multiple on their few hundred million dollars invested. But a sale to FlexGen would protect Powin’s physical legacy: The gigawatt-hours of batteries installed across the world could keep on humming, as the energy storage market careens ever onward.
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