Mike Hopkins, who led an ownership change six years ago at Ice Energy, is finally beginning to see sales jump in an industry that moves at glacier speed.
The Costa Mesa-based company is installing 1,500 cooling systems on commercial and industrial buildings in Irvine, Tustin and elsewhere in Orange County. Its growth will be aided by a $40 million “funding agreement” from New York private equity manager Argo Infrastructure Partners LLC announced on June 26.
The company projects it will exceed $10 million in revenue this year for the first time.
“This will be a record revenue year for us,” Hopkins said. “We should, at a minimum, double that next year based on the contracts we’ve already signed.”
Ice Baby
Its flagship product, the Ice Bear, looks similar to a commercial air conditioning unit. It makes ice at night—when electricity is cheaper—through a copper coil system that pumps refrigerant through regular tap water stored in a 450-gallon water tank.
The product makes ice in seven to nine hours.
During the day, the Ice Bear shuts down the AC compressor and uses the stored energy to cool the building, providing three to six hours of energy-efficient cooling during peak hours and 40 hours of total cooling per cycle.
When the entire OC project is up and running in a few years and 1,500 of the Ice Bears are connected to 3,000 AC units, the company said it will save the energy grid 22 megawatts of power at peak demand.
A megawatt of energy can generally power 750 homes at once.
Easing the grid is a major concern at every taxed utility in the country, particularly in Southern California.
Southern California Edison this year signed a 20-year deal with Ice Energy, which will install and maintain the units through local contractors. The deal was on undisclosed terms.
The utility wants to reduce demand on two large substations, Johanna in Santa Ana and Santiago in Irvine, thereby easing the grid on other nearby substations. The alternative is to either upgrade the substations or replace them at a high cost.
“The substations were becoming inadequate for demand,” Hopkins said. “Our project eliminates the need for them to put that capital in.”
The Ice Bear, manufactured in New York by Hammondsport-based Mercury Corp., has a lifespan of 20 years.
Ice Energy has signed up customers for 200 Ice Bears in the last six months as it ramps up installation to roughly 135 Ice Bears every quarter.
The product is free for customers, who sign long-term agreements, essentially positioning Ice Energy as a utility.
What’s in Store
Argo Infrastructure Partners, which manages more than $2 billion in assets for institutional investors, has invested in projects such as a power transmission system and energy-generating assets in Pittsburgh and Pueblo, Colo.
The private equity firm generally seeks projects that yield more than 10% over a 10-year period, Hopkins said. The investment in Ice Energy isn’t an equity stake, but rather to fund specific projects, he said. Argo, which has connections in Europe and the Middle East, typically invests $100 million to $500 million in a company.
“They view this investment in Ice Energy and the current project as the first tranche,” Hopkins said. “They’re interested in the future.”
Proving Longevity
Ice Energy was established in Colorado in 2003 by Frank Ramirez, Brian Parsonett and Greg Tropsa, who initially hired Hopkins as an adviser.
The first Ice Bear model rolled off the production line two years later.
The company raised $93 million through 2012 from a mix of institutional backers, including local venture capital firm Sail Venture Partners and Energy Capital Partners in Short Hills, N.J.
Sail, now based in Corona del Mar, shuttered its venture fund in 2015 and now provides consulting services.
Hopkins, then general counsel, helped sell the company in 2012 on undisclosed terms to Pacific Advantage Capital.
The founders left Ice Energy after the transaction, and Hopkins was promoted to chief executive in 2014.
For much of its first decade, the company was essentially a research and development outfit, handling pilot tests and case studies for smaller utilities and municipalities.
“There wasn’t really a market,” Hopkins said.
The company had a proof of concept, though, certified through more than 40 pilot programs.
The California Public Utilities Commission in 2013 unanimously approved the country’s most sweeping energy storage mandate in Assembly Bill 2514, which required the state’s big three utilities—Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric—to add 1.3 gigawatts of energy storage to their grids by 2020.
“There was this seismic change in the market,” Hopkins said.
Ice Energy went from handling pilots to competing on bids for large-scale megawatt projects. It raised $20 million after the sale to help meet demand. The company employs about 40, the majority in Costa Mesa, where it established headquarters this year.
Today it has projects that provide 15 megawatts of energy storage throughout the state and is installing 30 megawatts as it eyes international expansion and enters a residential market propped up with state incentives, rebates and tax credits. The company should be profitable next year, Hopkins said.
