Power Solutions International, Inc. (PSI) (NASDAQ:PSIX), and its subsidiary Professional Power Products, Inc. (3Pi), today announced that it has signed a major multi-year supply agreement with the premier U.S. microgrid provider Enchanted Rock, Ltd. (ERock). The agreement is valued at approximately $240 to $335 million over the first five years.
3Pi designs, manufactures, and sells custom-engineered, integrated electrical power generation systems for standby power, demand response, microgrid and cogeneration (CHP) markets.
The new agreement expands the partnership between ERock and 3Pi, established by an earlier agreement signed in June of 2016. The mutually exclusive, multi-year agreement specifies that ERock will purchase an additional, approximate $30 million of the new microgrid genset units from 3Pi in 2017 with volumes increasing significantly in 2018, 2019 and 2020. PSI will exclusively supply the 21.9L engine to ERock for reliable microgrid applications in North America.
“This latest agreement with ERock solidifies 3Pi’s shift of focus to the rapidly growing, high-value distributed generation markets (microgrid, demand response & CHP),” said Gary Winemaster, PSI’s Chief Executive Officer. “Our emphasis on highly engineered solutions rather than commodity genset packaging, allows us to utilize our depth of engineering to take advantage of ongoing energy market trends. ERock is a market leader in the reliability microgrid space, and we are excited to have them as our exclusive, long-term partner.”
This new agreement, combined with the original agreement, has positioned 3Pi for significant revenue growth in 2017. He expects 3Pi’s 2017 revenue to greatly exceed its previous high water mark of $40 million, with continuing strong growth in the subsequent years covered by the agreement.
“The PSI Heavy Duty natural gas engine is the perfect prime mover for ERock’s microgrid customers,” ERock CEO Thomas McAndrew said. “It has best-in-class emissions, an important feature to our microgrid customers, and is incredibly robust, capable of safely and efficiently managing our customer’s facilities when the electric grid is not available, whether momentarily or for weeks on end. We are very excited that PSI has partnered with us to supply this engine exclusively to ERock in its new microgrid genset.”
In addition to the original design, ERock and 3Pi intend to jointly develop specialized gensets for cold weather climates in North America, targeting reliability microgrid applications that provide protection against loss of utility power and electrical energy for grid sales. 3Pi/ERock design teams’ custom engineered the genset systems to optimize size, emissions, efficiency and durability, while reducing noise and lowering overall operating costs.
McAndrew added, “The PSI, 3Pi and ERock teams have collaborated closely for the last 24 months to develop a microgrid genset that provides substantial advantages over other offerings in the market. It’s a game changer for us and the industry.”