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St. Paul battery startup sees promise in helping businesses manage power

A St. Paul, Minnesota, startup company is developing an energy storage system to help businesses lower their utility bills and keep the lights on during power outages.

Vessyll was founded in 2020 by Adam and Zahra Iliff, who moved to the Twin Cities after deciding they wanted to raise their family in the Midwest. The company was recently selected to participate in a regional clean energy accelerator program and is deploying its first system this month as part of a pilot project on a northern California microgrid.

The U.S. energy storage sector is an estimated $7.5 billion annual market with several big-name players such as Tesla, Toshiba and Siemens already holding a stake. Most of the activity has been around large battery systems designed to help utilities manage the electric grid as they also install more variable wind and solar generation.

Where Vessyll sees an opportunity is in the middle tier — bigger than Tesla’s residential Powerwall but smaller than utility-scale systems — in a niche that includes commercial and industrial customers, as well as some larger residential uses.

“Vessyll is ahead of the curve [for a sector] that will grow exponentially, and they have an absolute chance to be a player in it,” said Nina Axelson, president of Grid Catalyst, the Twin Cities-based startup incubator that selected Vessyll this spring as part of its first cohort.

Adam previously worked as a senior project manager in Tesla’s battery division, where he became a student of the technology. His experience there led him and Zahra to try to design an easy-to-use battery system that wouldn’t require much work by contractors to install or set up.

The result is the Vessyll, which holds up to 46.5 kilowatt-hours of power, more than three times the storage of Tesla’s Powerwall. Tesla discontinued its mid-sized Powerpack product last year and now focuses on smaller residential systems and larger utility systems.

“Vessyll is a plug-and-play device that holds more power than other batteries” that target the commercial and residential markets, he said. “We’ve also developed what we call our ‘secret sauce,’ which is the energy management system built into the battery.”

Initially, Adam and Zahra had no preference for the type of battery technology. However, after speaking with scientists and other experts, they chose lithium iron phosphate technology because it uses a water electrolyte that is less prone to fire risk than the chemical electrolyte found in lithium-ion, Zahra said.

The couple also liked that the technology has been around for years and costs less than lithium-ion batteries because it requires significantly less nickel and cobalt. One downside is that it is less energy dense and requires more physical space than lithium-ion technology. 

Adam hopes Vessyll could someday tap Minnesota’s iron ore industry for materials, which he said operates in a much better regulatory environment than other countries. “We’re trying to stay away from child labor and African mining,” he said.

The Vessyll’s controls, he said, offer greater sophistication than other energy storage devices. He said the power output is three to four times faster than competitors, and the software can more precisely transfer stored energy to match building loads.

The first Vessyll pilot begins this month at the Colusa Indian Community in northern California. The tribe has a casino, resort and residences powered partly by large solar arrays functioning within a microgrid. Vessyll will provide uninterruptible power during outages, offering the tribe enough time to start diesel generators capable of providing backup electricity for hours, Adam said.

Bruce Geveden, owner of California-based Geveden Industrial Inc., will install a Vessyll on the tribe’s land. Geveden has known Adam since his years at Tesla and he likes Vessyll’s technology and size. Energy storage has become more popular as California’s utilities have moved to use time-of-use pricing.

“Batteries have become important over the past couple of years to reduce demand charges,” Geveden said.

Adam said Vessyll will ship five units in the third quarter of this year and 15 devices in the first quarter of 2024. Clients pay upfront for batteries before they receive the delivery.

Vessyll builds the systems at the University Enterprise Labs near the University of Minnesota. The long-term dream is to create a factory that would employ 1,500 people and produce a gigawatt of storage annually. For now, Adam has not given up his day job working for a San Francisco solar company, nor has Zahra.

In the short term, Adam said that if he can move to a manufacturing facility, the lead time needed to produce a Vessyll will go from 26 weeks to six to eight weeks. A dedicated manufacturing space with materials on hand “would be fantastic,” he said.

Aaron Hanson, energy program specialist at the University of Minnesota’s Institute on the Environment, said for commercial and residential customers batteries could become more valuable than just backup power as utilities move toward time-of-use pricing. Customers with energy storage will have an easier time shifting electricity use to hours when rates are lower, potentially shaving their utility bills.

Hanson added that battery storage needs more diversity of materials in technological applications. 

“We need more than one approach in battery storage technology,” he said. “It will be interesting to see how this technology performs.”

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