It is expensive and takes a long time to pay off. Does it have a future?
Yuri Vlasov, as a child, thought about how to create a house that would provide itself with energy. Growing up, he went to work as a financier in the Surgut branch of Gazprom - but the employment did not satisfy him and at the same time he was engaged in complex technological tasks: for example, he once installed a wood-burning fireplace on the 10th floor of an apartment building. Later Vlasov moved to Moscow and entered Skolkovo, where he began to embody his childhood dream of a home that uses only renewable energy sources. The result was the Watts Battery portable battery: over five years of development, the startup raised $ 3 million in investment and distributed several dozen devices to companies and individuals in Russia, Europe and Africa. This year Vlasov plans to produce 1,000 batteries. He told Inc. why he sells the device for less than the cost price,
Yuri Vlasov, founder of Watts Battery
Watts Battery is a battery that can store energy from wall outlets and solar panels. You can use this energy through the sockets in the drive or by connecting it to the electrical panel. Outside the city, power outages often occur - this can lead to equipment breakdown. The system will monitor the operation of electricity: when it turns off, the drive will start to supply energy.
This is a story about how to protect yourself and make your house independent of what is happening outside: a tree fell on the wires, a construction site in the area or an accident at a power plant. I use the drive all the time: it is always in the car, just in case.
One Watts battery costs $ 2,500, a set of solar panels for it costs $ 1,000. Such products are expensive to manufacture. Reducing production costs depends on volumes - and they don't grow fast. Sometimes you have to sell for less than the cost price: one device costs $ 2.3 thousand, if you add logistics costs here, the cost reaches $ 2.8 thousand. We deliberately went for this, because it makes it possible to sell the drive anywhere in the world.
Home needs at least three batteries. You can put the devices on top of each other, and the power will increase - this happens without any complicated steps. One battery weighs 14 kg, its dimensions are slightly larger than the standard Ikeev shelf - 46 × 36 cm.
In Russia, the drive will pay off in about 7 years. We know how much the drive can generate during this time, and we multiply by the tariff. We constantly pay for electricity, but here the system, in 7 years, in fact, gives it away for free.
Responding to uncertainty
Since childhood, I have believed that a house should be independent. I think it was influenced by childhood in the 90s: due to constant uncertainty, a defensive reaction to her developed. It seems to me that many people of this generation are striving for independence from everything, trying to get out of this uncertainty. For example, I would like to live anywhere, regardless of the infrastructure of the place.
A person can get electricity or heat, for example, in a field or forest - but people do not use all available natural resources. It annoyed me: a person has already invented so many things, but for some reason he cannot meet the basic needs for heat, water, energy. We have multi-family anthills, but when it comes to individual housing and comfort, everything is sad.
I grew up in Surgut, my mother was in business in the 90s. There were no technical universities where I grew up, so after school I decided that I needed to learn to count money and went to study to be a financier.
When he graduated from university, he began working for a company that was engaged in environmental projects. One of the projects was the collection of various tires: from airplanes to some kind of huge trucks. I organized the process of receiving and sending raw materials to Volzhsk for further processing.
At one point I was invited to work at Gazprom, where I had an internship while still studying at the university. Naturally, I dropped everything and went there, because I wanted to make a decent living. I climbed the career ladder from a technician to a leading specialist, then moved to Moscow and became a chief economist in one of the departments of Gazprom.
In the Surgut branch it was boring to work in a monotonous schedule from 9 to 18 hours, to do the same thing. It became boring to work in Moscow, because in the corporation I did not feel that I could influence anything. There is you, there is no you - everything works like that. When the company moved from Moscow to St. Petersburg, I realized that I would not go, because I did not like this climate.
I started looking for ways to clean myself up after 10 years in a corporation - during this time I turned into a corporate vegetable.
I remembered that even before university I wanted to learn how to build a business, so I went to study at the Skolkovo School of Management - I liked their MBA program. It was interesting to understand whether I am a real entrepreneur and therefore it is difficult for me to work in the system, or I simply did not learn to work this way.
Even then, I was interested in understanding the technologies on the market - types of processing, types of waste.
Children's dream at a meat packing plant
Around 2009, I stumbled upon a Swedish air-line waste collection system : waste from a bin through special pipes goes directly to a recycling plant. I wanted to design a block that would have such a pipeline to solve the sorting problem.
During the training, I talked with many people from the industry: they explained that this would not work at all in Russia, because, in fact, there is no market for recyclable materials.
As a result, I abandoned this idea and started working on energy efficiency - analyzing the energy supply systems of specific facilities and looking for places where efficiency could be improved. For example, in refrigeration equipment, the motors operate in two positions - on / off. By adding management of these items, you can make consumption more efficient.
At some point, one of the classmates at the Skolkovo school suggested thinking about adding a megawatt of power to his meat processing plant. We started looking for a solution: the first option was gas turbines - but they have a small capacity and they are expensive.
It became obvious that a container was needed where the energy would be stored.
In June 2015, I came across a Tesla Powerwall presentation . I really liked the idea of the product itself. In August, we had a training module in the US, and I took advantage of it to learn about this product at Tesla headquarters.
It turned out that I just couldn't get into the office, so I decided to just walk around the territory. There I happened to meet an engineer who was working on this project. He said that it was just a presentation, and the start of sales is planned only in 2017.
I was upset because I was already planning to supply batteries to Russia - I wanted to use them to solve the problem with the lack of power at industrial facilities. Then I began to reflect and decided to create my own device.
At some point, the idea of storage merged with my childhood dream of a self-sustaining home. I began to research the market, see what kind of Powerwall exists in the world - there were not so many such solutions for the home, mainly companies produce drives for industry.
At the same time, I did not want to make another Powerwall, because it requires many additional components - this is not an independent device. It was necessary to create a product as simple as possible so that anyone could easily install it.
I wanted to kill fuel generators with my product. They use fuel as a source, they pollute the atmosphere, they are heavy, they need to be serviced. Unfortunately, the users of generators were not on our side - everything is fine with them, and everything works like that. Nobody likes new products if they are not under some brand or the neighbors do not have them.
For the development, we attracted the money of an investor - advisor to the president of the Skolkovo fund, business angel Pekka Viljakainen. I invested some part: I took out loans. The investor gave $ 250 thousand, me another $ 50 thousand. Then there was the post-crisis 2015, it was clear that it was necessary to create a product not only for Russia, since both the currency and the cost of development became cheaper.
How the team fell apart
He began to assemble the team in February 2016 according to his needs: first he found a power engineer, then a designer, constructor and programmer. We selected a team by word of mouth. When the sketches appeared, they began to make a prototype. Our box was filled with meaning as we found competencies.
We registered the company when we got the first MVP - a prototype solution that allows us to confirm that it is possible to assemble such a set of equipment in one box.
In April 2017, we had a ready-made device. It consisted of parts that we developed, produced and assembled in 9 months. We took the model to the TechCrunch exhibition in New York and the CleanTech industrial exhibition in Helsinki. Everything worked well at the exhibitions, but from the inside the device was assembled in a hurry. At some point, it fell or hit - and went out of order.
We brought this device to the CE certification . The prototype, which we took for certification, cost $ 300 thousand. Then we did not pass certification, because we did not take into account various technical details: what elements could be nearby, how much heat the components emit (because of this, the device overheated). This failure ruined the team. Out of five people, first two left, then one more.
But I understood that we were on the right track, that we just needed to fix the shortcomings - and everything would work.
Part of the team simply didn’t believe it, and the rest of the people believed it. Now, when employees come to us, I explain how we see the world. If a person leaves, I say “excellent”, because there are people who are captivated by this.
Now the team has 16 people. In normal companies, 50% of people solder boards, the rest do other tasks. We're crazy: we have 90% of our employees soldering.
Among the employees who left Watts in 2017 is the startup's CTO Alexander Kiyanitsa. Later he became the CEO and co-owner of Volts Battery LLC - this company creates a similar drive under the VOLTS Battery brand. According to Vlasov, Kiyanitsa was “taken out of the project” by his former partner Vladimir Mlynchik. “He gave him money and registered a competitor,” says Vlasov. According to him, he bought out Mlynchik's stake in Watts in 2017, and he "did not fulfill his investment obligations." Alexander Kiyanitsa declined to comment on the situation in a conversation with Inc. Vladimir Mlynchik did not respond to Inc.'s request.
Give up everything and move to America
In January 2018, we were able to present two prototypes at CES : they differ little from what we are currently selling. To represent them, over the summer we completely redesigned the entire device, and from September to January we worked seven days a week.
CES made a huge contribution to the company: in three days, we received 15,000 pre-orders for devices and a lot of good reviews. We couldn't believe it. I wanted to give up everything and move to America.
I am a maximalist: either everything or nothing. Then it seemed to us that we were making our device for too long. In Europe, people were interested in the product, but they were only interested in the technical part, how what works - they were not going to buy anything. In America, people immediately thought in terms of buying - we saw a completely different attitude towards the product. Companies selling off-the-shelf engineering solutions built our product into their business models and figured out how to make money on it.
We did not leave, because in the USA everything would have to be done anew. The product was not yet ready to the end: it was necessary to finish everything, and only then think about America. Then we set the task of making a serially produced device from a prototype. This stage was preceded by trial operation.
No money - no interest
In 2018, we raised $ 800 thousand. In total, it took $ 1.5 million to reach the first working sample. Another $ 1.5 million was needed to start production. The head of RB Partners and the teacher of the Skolkovo school Alexei Goryachev invested $ 400 thousand in us. I cannot name the other investors, because these are non-public people who do not want to spread information about themselves, who and how much invested
Throughout 2018, we have been making a device that could be used without our supervision. The first module went to the client in Switzerland at the very end of the year. In 2019, we planned to produce 50 copies and distribute them in different countries in order to receive contracts from these countries later. We received inquiries from companies, we made mailings ourselves. From exhibitions we had a huge number of contacts of people who would be interested in using the drive.
At first, we just donated the product to the company for free. But when a company gets a product for free, it just lies there: they have no time to study it.
When they started selling, feedback began to go. The money confirms that the company is interested.
The first devices were unstable due to poor fuses. It seemed to someone in the application that the numbers were jumping. Thanks to the feedback, we realized that we need to automate everything so that customers do not puzzle over what and when to click. We have fulfilled this plan.
In 2019, we raised $ 90,000 in 10 countries. Our clients were mainly companies that sell engineering solutions for houses (among them Swiss Richard Schmid Elektro, Spanish Siarq, Israeli Smartsolar). At the end of the year, we were ready to start production, but we stopped it in March 2020 due to a pandemic, and started it again in May.
In December 2019, we signed two contracts in South Africa and Nigeria, in July there were the first deliveries. African companies contacted us on their own because many people there have no access to electricity. As a rule, there it is solved with the help of cheap Chinese batteries.
Now we are working on contract manufacturing: we give the factories (one in Russia, the other in Latvia) our terms of reference, and they make devices according to our documentation. We eat the elephant a little: the number of orders and contracts with factories is growing, and production in America will soon appear. This year we want to deliver about 1,000 devices.
There are few partners among Russian companies, because we entered the Russian market only a month ago. Now our buyers in Russia are people living in private houses and townhouses.
We are not getting ready to enter the market of Asian companies, because they are already on the market with some similar products. We have delivered the product to 10 countries, so it's hard to tell what our main market is. But no matter how many companies there are in the world, there is always room for other manufacturers.
What market participants think about the future of Watts Battery
Nikolay Posypanko, Head of Energy Markets
VYGON consulting (is engaged in fuel and energy complex consulting)
It is advisable to buy such devices for three reasons. The first is reliability. While power outages in large cities in Russia are rare, in remote areas and dacha associations, power can be cut off several times a month. The drive will provide the house with electricity at this time.
Secondly, the drive provides autonomy from the network if used in conjunction with a solar power plant (SPP). The midday sun energy can be used in the evening or the next morning. Although in this case, installation with a drive will at least double in price.
Third, payback is important due to savings on technological connection to power grids and the difference in tariffs day and night. This scenario is promising in Russia so far only for legal entities. In this case, the drive should cost about 30-35 thousand rubles. for 1 kilowatt-hour of capacity, which is about five times cheaper than the solution offered by Watts Battery. At this cost, the drive will pay off in seven years due to charging during off-peak consumption hours (at night, when electricity is cheaper) and discharge during peak hours (in the morning, afternoon and evening).
The storage market is promising against the backdrop of rapidly falling prices for renewable energy, mainly solar power plants, the production price of which in Russia has approached 7-9 rubles / kWh - that is, to the level of maximum tariffs for business, growing faster than inflation. For example, in Kalmykia and Volgograd, tariffs for small businesses exceed 8.5 rubles / kWh.
Anton Skibin, Cluster Acceleration Director
Energy efficient technologies of the Skolkovo Foundation
The question is not whether modular personal power plants are needed. The question is: when will we be able to afford them? Sure, it's nice to get a convenient all-in-one device for uninterrupted power supply to your home - but how much is a home owner willing to pay for a reliable power source? A gas generator is cheaper.
It is quite another matter when a solar panel is connected to Watts and is used constantly - here it is already quite possible to save on the electricity bill. Foreign consumers will be able to significantly reduce costs, but with the new legislation this is possible in Russia as well.
But in my opinion, the ecological component is more important. The ability to use clean solar energy, reduce the peak load on thermal power plants in the morning and in the evening - all this is difficult to assess in terms of money and return on investment, but already creates an additional incentive for Watts consumers in foreign markets. When the factors of economy and ecology outweigh the cost of a personal power plant with storage, then the potential is converted into sales in the Russian market.
Investment Director of RVC
The production of renewable energy sources is a promising direction for the players of the venture capital market, which combines low risk and attractive profitability. Watts Battery's solution is not directly related to this area, but it is quite interesting for potential investors. However, in my opinion, projects that offer a new or improved way of saving energy look more interesting. That is, those companies that have proposed something new in terms of technology, and not just in the product layout.
Source Inc. in branch
I like everything about the company: it's a great idea, it has proven its worth and that people need it. Then the nuances begin.
First, the price. Basically, their product is a purchased battery, assembled in a case, and they make software. That is, they pack the batteries beautifully - that's what Tesla does. Sooner or later, this story turns into price competition. It will be difficult to compete with Chinese manufacturers: they have lower prices, comparable quality, they can quickly roll out large volumes.
Secondly, if the battery manufacturers themselves want to enter this market, they will do it instantly. There are no entry barriers for them, the only question is their desire to play in this market.
This story may work, but it needs scale. The company needs to turn around quickly, Chinese and Korean manufacturers may soon appear on the market. They should attract maximum money and get user experience as soon as possible.
For example, in Germany there are similar products, and they are rapidly developing due to government subsidies. I don’t think that in Russia it will be so expedient, because we have more or less cheap stable electricity. The ideal case is when the lights are turned off in the village for a while. Now this product is ahead of its time in Russia.
Managing partner of RB Partners,
Investor Watts Battery
We met Yuri on a course I taught at Skolkovo. He wanted to know how much his project was worth. At the first meeting, I just told what investors look at when evaluating a company. Then he said that he needed a partner who could close some financial part of the project. I am omnivorous in terms of investments, and during the conversation I realized that Yura is suitable for partnership, it is important for him that the project succeeds, he is not driven by greed.
People want to be independent, including energetically independent, to find their sources. Most Watts competitors make devices that require a specialist to install, and the key word in innovation is “simpler”. In addition, people in the West are now thinking about excess capacity in storing electricity, because recycling batteries pollutes the environment. The battery allows you not to think about it - it captivates me.
For the emergence of something new, shocks are always needed, with the pandemic everyone learned to use the "zoom", I learned to order products online - it all existed, but no one needed it. Therefore, you should always think about the market in the present and the market in the future. Because of the pandemic, people flocked to the village and the battery became necessary.
Originally published on INC. Magazine