The dramatic reduction in the cost of solar energy means we can cheaply produce clean power– but only when the sun is out. Batteries are a natural companion to solar, capable of soaking up surplus energy when the sun is shining, and using that energy or feeding it back to the grid at night. Fortunately, batteries are following a similar reduction in cost to solar, coming down 90% in the last decade alone. As batteries continue down the cost curve, they’re becoming increasingly attractive as a way to balance grids struggling to integrate intermittent forms of energy. Today, however, there is a storage gap. In California alone, there are sometimes gigawatts of solar that are going to waste because of a lack of storage. We believe this gap creates an exciting opportunity for startups that can figure out how to effectively deploy batteries.
Early in the development of a new market, vertically integrated companies deliver a superior user experience by owning each part of the stack and making sure they all work well together. Vertically integrated companies get immediate feedback from customers and can respond quickly, tightening product development cycles. This is especially helpful in new energy markets where unanticipated regulatory moves can force immediate product changes.
We are thrilled, therefore, to invest in Cactos, a Finnish battery company offering a comprehensive energy storage solution. Cactos is taking a vertically integrated approach to the market, owning everything from battery pack assembly to the battery management system and cloud based energy management systems that enable their batteries to be called on to provide ancillary services for grid stabilization. They go beyond even other vertically integrated competitors with their novel financing solution that enables them to offer their Battery Energy Storage System (BESS) to commercial and industrial customers (C&I) for a very low up front cost and a modest monthly fee.
Cactos’ BESS hedges the client against electricity market volatility and improves the availability of power by cutting consumption peaks and providing reserve power. By using their cloud-based energy management software to tap into the excess capacity in their customers’ batteries, Cactos’ in-house trading operation earns revenue in European energy markets and is able to share that revenue with their customers, further reducing the cost of ownership of their energy storage systems. Cactos makes the integration of these assets an easy and low-risk choice for customers as it comes with all the necessary hardware, software, and services at a fixed monthly fee.
Cactos is a natural fit for USV’s thesis of investing at the edge of markets. They’ve been able to quickly sell and operationalize their batteries by starting with the C&I market. And although each of their batteries is relatively small, as Cactos grows around the edges of the grid, it connects those assets to form a virtual power plant that can meaningfully relieve the pressure on the grid. In this way, Cactos is a great example of how small pieces loosely joined can work from the outside in to transform a huge market. It is no surprise that grid operators have noticed, opening up a whole new market for Cactos in front-of-the-meter. They have already delivered their first grid-scale system and have several more in the pipeline
We couldn’t be more excited to be working with Oskari and the rest of the Cactos team.
