Powering Ahead with DC Solutions in 5G, Electric Vehicle Charging, and Nano/Microgrids

KEY POINTS

  • Founded in 1979, Polar Power is a leader in providing clean and efficient DC power systems for backup, primary, and mobile power needs.
  • The DC power market is expected to reach $5.5 billion by 2025 from $4.2 billion in 2019.
  • Polar presently supplies DC power systems for a variety markets including 5G telecom, EV charging, and nano/microgrid systems for homes and business.
  • Global Tier 1 telecom customers are currently the primary source for the revenue and backlog, with 5G deployments driving demand for tower infrastructure and backup power worldwide.
  • The global telecom power systems market is expected to grow at a CAGR of 9.7% between 2020 and 2027.
  • The rapidly growing demand for EV charging is likely to strain the utility grid and can be supplemented by cost effective, clean, and efficient solutions by Polar’s DC power systems in both stationary and mobile charging applications.
  • Nano/microgrids are seeing growing demand for several reasons. Polar plans to actively pursue this market in sub-200kW applications where its DC power platform offers several advantages over incumbent AC power solutions.

CATALYST MONITOR

  • Develop and execute a strategy to access the EV charging and distributed energy (nano/microgrid) markets.
  • Launch Toyota 1KS and 4Y engines operating on natural gas and LPG for residential and commercial markets in 2Q21. The soft launch in Q420 in the telecom segment has shown promising results.
  • Achieve technology milestones, including a commercially available 50kW DC power system to help access the nano/microgrid market.

OUR INSIGHTS

The Opportunities

Polar operates in the fast-growing market for DC power systems. According to ReportLinker, the DC power systems market size is expected to reach $5.5 billion in 2025 from $4.2 billion in 2019, with units growing from 895k in 2019 to 1.04 million by 2025. DC power systems offers some key advantages over AC power solutions including smaller footprints, lower weight for increased mobility, higher efficiencies. Within the DC power market, Polar focuses on three key applications: 5G Telecom back up and primary power, EV charging, and nano/microgrids.

The company believes it is the leading DC power supplier to Tier 1 US telecom customers, which positions it well to leverage 5G spend. Over the near term, backup power systems for 5G in the US telecom market will be the primary backlog and revenue driver.

Polar plans to leverage its DC technology to address EV charging. EV charging infrastructure could become a bottleneck for EVs, and the industry is looking for solutions. Polar has an opportunity to leverage this market. Over the next 12 months, the company could see key inflection points in this market. Its DC power systems are very well-suited for stationary and portable charging solutions for EVs.

The third key driver could be nano/microgrids. Demand for microgrids is on the rise as governments, commercial property owners, energy as a Service (EaaS) providers, and even residential locations are establishing microgrids to provide alternatives to traditional utility assets. As the company expands its product line, it anticipates seeing expanded opportunities for onsite power solutions up to 200kW. The company’s DC power platform integrates seamlessly with existing renewable and battery components.

The Obstacles

The company must continue to effectively compete with larger entities in the telecom backup power market. The company has proven it can effectively compete with larger players and is the primary DC power supplier to US carriers, but competition will continue.

Additionally, the company’s expanded effort into the EV charging and nano/microgrid market is still in the early stages. Management will need to fully define and execute a go to market strategy and understand the costs and talent requirements to do so effectively. There is also the issue of funding these efforts as the company is currently not cashflow positive, but the company believes it can develop these markets over the short-term with the existing balance sheet.