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FlexGen Power Systems has submitted a stalking horse bid to acquire rival US battery energy storage system integrator Powin, which is currently undergoing Chapter 11 bankruptcy proceedings in New Jersey.
Powin cited challenging industry headwinds, including policy uncertainty over US import tariffs and investment tax credit incentives, as key factors contributing to its significant financial difficulties.
The proposed acquisition could allow FlexGen to integrate Powin's extensive customer base, project portfolio, and hardware expertise with its own advanced energy management software and strong market presence.
This development highlights ongoing consolidation pressures within the US BESS industry, driven by intense competition and the increasing vertical integration of Chinese battery cell manufacturers.
FlexGen Power Systems has emerged as a stalking horse bidder in the Chapter 11 bankruptcy proceedings of its rival, US battery energy storage system (BESS) integrator Powin. This strategic move signals a potential consolidation within the rapidly evolving US energy storage market, as Powin navigates significant financial challenges that led to its June filing for Chapter 11 protection with the bankruptcy court in New Jersey.
Powin, an Oregon-headquartered manufacturer and system integrator, cited a turbulent industry environment as a primary driver for its financial distress. The company pointed to the impact of policy uncertainty surrounding US import tariffs and the future of Investment Tax Credit (ITC) incentives as critical headwinds. Following a May notification of potential layoffs and business cessation, Powin initiated bankruptcy proceedings, concurrently launching a separate services arm, Powin Project LLC.
On June 26, the New Jersey US Bankruptcy Court authorized an interim order allowing Powin and its subsidiaries to secure post-petition operational cash flow financing. This included a secured superpriority debtor-in-possession (DIP) delayed drawdown term loan of US$27.5 million, with FlexGen identified as the stalking horse bidder behind the DIP Lender offer. The loan's Term Sheet outlines a structured drawdown, with initial access to US$10 million, followed by further tranches contingent on court orders and, notably, a potential reduction of US$4 million if FlexGen begins assuming Powin employee contracts as part of a sale.
The proposed acquisition suggests FlexGen's intent to not only absorb Powin's substantial customer base and project portfolio across the US and international markets but also to integrate Powin's complementary product and service offerings. FlexGen, originally a microgrid controls specialist, emphasizes its 15-year field deployment track record and its proprietary energy management system (EMS) software platform, Hybrid OS. FlexGen CEO Kelcy Pegler recently highlighted the company's fleet achieving 98% availability in California’s CAISO and Texas’s ERCOT markets, attributing this performance to AI-driven software advancements that enhance decision-making and operational efficiency.
Conversely, Powin's expertise lies in battery storage hardware integration and battery management system (BMS) development, offering modular BESS solutions like the Centipede and Powin Pod, alongside its StackOS BMS. Industry experts, such as Drew Lebowitz of PowerSwitch, note Powin's pioneering role in US BESS system integration, particularly its ability to integrate Chinese-sourced cells into its systems. However, Lebowitz also suggests that while industry headwinds exacerbated Powin's pressures, the system integration space faces increasing squeeze from Chinese battery cell OEMs, such as CATL, which are vertically integrating into BESS manufacturing. CATL, a major supplier to both Powin and FlexGen (FlexGen signed a 10GWh supply deal in 2022), exemplifies this trend.
This market dynamic underscores the imperative for non-Chinese system integrators like Fluence, Wartsila, or Tesla to differentiate their offerings through quality, track record, and customer engagement. Furthermore, the ongoing debate in Congress regarding domestically produced or non-Chinese equipment for the US market could significantly influence the competitive landscape. Powin's extensive installed base, including projects in Australia, Asia, and Europe, presents a significant opportunity for FlexGen to expand its global footprint, an area it has previously expressed interest in pursuing.