Independence Power Holdings, Inc. (OTC: ITXP)

Independence Power Holdings, Inc. is an energy technology company that develops software and hardware solutions for managing battery energy storage systems at oil and gas facilities. The company focuses on the design, installation and integration of industrial battery management and monitoring systems for high voltage battery storage units. Its primary market is unconventional oil and gas operations, beginning with the Permian Basin in western Texas and southeastern New Mexico. Independence Power Holdings, Inc. does not own the battery hardware; instead it provides the software platform and related services while the rural electric cooperative owns the physical battery fleet. The company’s technology enables the battery systems to provide fast response and ride through capability during generator outages, helping to maintain continuous compression operations at well sites.

Independence Power Holdings, Inc. generates revenue mainly from software license and subscription fees for its proprietary battery management platform and from service fees tied to the performance of deployed battery systems. Under its asset management agreement with the rural electric cooperative that owns the battery fleet, the company receives a portion of the gross rental fees collected from end users. Additionally, it licenses its software to third party providers such as GridCore, creating another revenue stream. The company also anticipates earning fees based on measured outcomes such as improved power quality or reduced diesel consumption when its solutions are deployed at customer sites. These revenue sources support the company’s asset light business model that separates technology ownership from the capital intensive battery hardware.

Independence Power Holdings, Inc. operates in the competitive energy storage and services sector, where it claims a first mover advantage in the Permian Basin market. Its competitive advantages include a patented software platform, an asset light business model that separates technology ownership from asset financing, and the deep industry experience of its controlling shareholder’s management team. The company points to the documented 8 to 13 gigawatt regional electricity shortfall in the Permian Basin and the fact that only about one third of sites have grid access as evidence of a substantial addressable market for its behind the meter power solutions. Key competitors identified in the filing are Solaris Energy Infrastructure, Crusoe Energy Systems, Liberty Energy, Atlas Energy Solutions, ProPetro and ProFrac, many of which possess greater financial and operational resources than Independence Power Holdings, Inc.

The company’s customers consist of the rural electric cooperative that owns the 101 unit battery fleet, the cooperative’s patron members who are oil and gas operators in the Permian Basin, and technology partners such as GridCore to which it licenses its software. The cooperative, through its wholly owned subsidiary DBD Express I, LLC, is the entity that acquired the battery fleet from GridCore for approximately $216.9 million and has entered into the asset management agreement with Independence Power Holdings, Inc. for the operational management of those batteries. No other specific customer names are disclosed in the filing.