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.
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?
Major growth, then signs of trouble
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.”
The changing battery-storage landscape
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.”
Great Job Julian Spector & the Team @ Canary Media Source link for sharing this story.
