Slide 1: Leader in AI-Driven Storage Solutions
Leader in AI-Driven Storage Solutions December 2020
Slide 2: Disclaimer
This presentation was prepared exclusively by Goldman Sachs & Co. LLC (“GS”) and Credit Suisse Securities (USA) LLC (“Credit Suisse” and, together with GS, “we” or “us”) on a confidential basis and is being delivered to a limited number of accredited investors who have agreed to hold it in confidenc
Slide 3: Disclaimer (continued)
This presentation provides summary information only and is being delivered solely for informational purposes. The recipient of this presentation acknowledges that: GS, Credit Suisse, Star Peak and Stem do not provide legal, tax or accounting advice of any kind. It is not relying on GS, Credit Suisse
Slide 4: Star Peak has identified Stem as a market leader in the clean energy ecosystem
Star Peak has identified Stem as a market leader in the clean energy ecosystem Leader in AI-Driven Storage Solutions The Business Offering Size Founded in 2009, Stem is an industry leading AI-driven storage solutions business Star Peak Energy Transition Corp. (NYSE: STPK) is a special purpose acquis
Slide 5: Star Peak overview
Star Peak overview Magnetar Capital and Triangle Peak Partners Experienced Sponsor with Proven Track Record Star Peak’s Climate Focused Mission Backed by Compelling Economics Provide growth capital to a market-leading business focused on climate change Mike C. Morgan Chairman Co-founding partner, Ch
Slide 6: Our Vision: Smart Storage is Key to Global Decarbonization
Our Vision: Smart Storage is Key to Global Decarbonization Climate Change is the problem 27%60% Confidential 6 Electricity production is the #2 polluter responsible for 27% of greenhouse gas emissions(1) Fossil fuels still accounted for 60% of global electricity generation in 2019(4) 3x72% Natural c
Slide 7: A revolutionized grid, with Stem, is the solution
A revolutionized grid, with Stem, is the solution Grid Storage STEM Since 2019, 90% of new interconnection requests were renewables and/or storage, but renewable generation suffers from intermittency(1) Distributed, renewable generation is supplementing and replacing traditional generation Battery p
Slide 8: Stem is the first pure play smart energy storage company to go public in the US
Stem is the first pure play smart energy storage company to go public in the US Large Addressable Market + Strong Macro Tailwinds Market Leader with Best in Class Technology Balance Sheet Positioned to Capitalize on Growth Highly Visible Growth ~$1.2 trillion in new revenue opportunities for integra
Slide 9: Smart Energy Storage Drives The Grid Transformation
Hardware + Network IntegrationSoftwareMarket Participation Tier 1 standard hardware solutionsx Battery optimization via Athena AIx Upside sharing through sales into energy markets Smart Energy Storage Drives The Grid Transformation Lowers Energy CostsReduces Carbon Creates VPPs and Stabilizes the Gr
Slide 10: Stem operates the world's largest network of energy storage systems
Stem operates the world’s largest network of energy storage systems As cumulative installs grow, Athena becomes more intelligent, creating more value and a larger moat
Slide 11: Global Commitment to Decarbonization
Global Commitment to Decarbonization FERC 841 / FERC 2222 Confidential11 With the world committed to decarbonization, Stem is well positioned to capture this tailwind. Paris Accord California mandates zero non-EV passenger vehicle sales by 2035 NY, MA, VA set multi-GW energy storage targets Japan ne
Slide 12: Historical Power Sector is Being Transformed
stem Historical Power Sector is Being Transformed Confidential 12 Generation Substation End Consumers B Transmission joo =[=[=]
Slide 13: Power sector becoming more distributed, complex and dynamic
More distributed Power used to be all bulk centralized generation…now it is distributed and islanded to enhance reliability & resilience – requiring new solutions and business models More complex Power used to flow in one direction… now it flows bi-directionally – requiring new coordination and opti
Slide 14: Renewables, battery cost reductions and storage market growth
Renewables Lowest Cost Generation $ 400 Battery Hardware Rapid Cost Reductions $300 Storage Market 25x Growth Market Opportunity (2) 200 (1) 800 Levelized Cost of Energy ($/kW) $260 $280 $246 160 164 Cumulative Capacity GWh $ 200 $ 100 200920112013201520172019 $220 BESS hardware cost (US$/kWh) $140
Slide 15: Stem is a Market Leader with Significant Scale and Visible Growth
Stem is a Market Leader with Significant Scale and Visible Growth Confidential15 Stem is a Leader in Deployments Worldwide(1) One of the Top Systems Integrators by Disclosed Commissioned Projects 2014-3Q20 Stem, Inc 0100200300400500600700 1 Tesla, Inc Hyundai Electric Fluence Energy Nidec Corp1 NEC
Slide 16: Stem's Athena AI Platform is Built On >10 Years of Data + Experience
Stem’s Athena AI Platform is Built On 3 Generations and >10 Years of Data + Experience Confidential16 20M 900+ sites & ~1 GWh in operation & contracted(1) 16M 12M 8M 400+ sites & 100 MWh in operation 100+ sites in 4Moperation 0M 2014201520162017201820192020 Confidential ATHENA CUMULATIVE RUNTIME HOU
Slide 17: Patents granted covering Stem's software and storage data integration
24 PATENTS GRANTED COVERING STEM’S SOFTWARE AND STORAGE DATA INTEGRATION WeatherPricesMarketsGrid
Slide 18: Stem's Customer Services
Stem’s Customer Services Stem offers more value streams in more markets with more asset types AI-Driven Athena platform facilitates monetization of 11 out of 13 identified energy storage value streams ITC & PV Self-Consumption (ITC) Demand Charge Reduction (DCM) Time-of-Use Bill Management Distribut
Slide 19: Electric grid under strain, California turns to batteries
40,000 30,000 20,000 AGGREGATE SYSTEM POWER - KW 0 -10,000 -20,000 -30,000 -40,000 -50,000 CHARGING FROM GRID DISCHARGING TO GRID Its Electric Grid Under Strain, California Turns to Batteries New York Times “On Friday, Aug. 14, the first day California ordered rolling blackouts, Stem, an energy comp
Slide 20: Behind the meter and front of the meter applications
BEHIND THE METER “BTM” COMMERCIAL & INDUSTRIAL Reducing Consumer Energy Bill Athena AI optimizes time-of-use and demand charges, resulting in 10% - 30% monthly electricity bill reductions Corporate ESG Objectives 35% of Fortune 500 have committed to carbon neutrality(1) 2,500 2,000 1,500 1,000 kW 0
Slide 21: Sales channels
Direct sales Drives demand and “spec in” Stem solutions into enterprise procurement solicitations Sales channel partners Sells into commercial customers Distributors Reach broad based solar, electrical, building automation, HVAC market Large renewable project developers Drive demand within project d
Slide 22: Net Cash Available for Growth
Net Cash Available for Growth Balance Sheet Strength Supports credit requirements to convert large projects in pipeline Athena Expansion & Tech Acquisitions Product development to further extend Athena AI leadership position and accelerate roadmap ~$525MM Supply Chain Savings Joint Venture Opportuni
Slide 23: Seasoned leadership team with 150+ years of experience
Seasoned leadership team with 150+ years of experience in the software and energy space Leadership experience at technology, energy, and industrial companies 145 employees 1. John Carrington (Stem) 5. TBD (Stem Designee) 2. Anil Tammineedi (Stem) 6. TBD (Stem Designee) 3. David Buzby (Stem) 7. TBD (
Slide 24: Financial Forecast
Confidential Section 2 Financial Forecast
Slide 25: Revenue model: hardware, software and market participation
Hardware + Network IntegrationSoftwareMarket Participation Total Deliveries (kWh) (x) Project Hardware ASP ($kWh) = Total Hardware Revenues ~10-30% Hardware Gross Margin Total AUM (kWh) (x) Software Subscription ($/kWh/month) = Total Software (Recurring) Revenues ~80% Software Gross Margin Total AUM
Slide 26: Illustrative project revenue contribution case study
Illustrative project revenue contribution Case Study Front of the Meter, New York Market Hardware + Software 10%Variable 5 MW / 20 MWh Standalone Storage Solution ~$10MM customer lifetime value 30% 60% DeliveryYear 1-20Total Revenue Recurring Upfront Hardware + Network Software Revenue(1) Market Par
Slide 27: Business scales with accelerating storage adoption
Business scales with accelerating storage adoption Bookings & Deliveries(1) (MWh) Bookings & Revenues ($MM) 8,000 6,000 5,593 7,183 5,965 $1,200 $900 Software and market participation growth driven by recurring software revenue streams and expanding $ 848 $ 1,159 $ 1,167 $ 974 $ 944 4,000 3,195 4,26
Slide 28: Bookings underpin significant visibility of 2021
Bookings underpin significant visibility of 2021 $ 400 $ 300 $ 200 $ 100 $ 0 $ 130 $ 241 ~88% from executed contracts >14x coverage on remaining 12% of revenue target $ 147 Current Contracted Backlog 140 Projects in Process 43 Customers 2.5 MWh Average System Size Contracted RevenueNear-term Pipelin
Slide 29: Robust revenue growth by customer type and segment
Robust revenue growth by customer type and segment By Customer Type ($MM)By Segment ($MM) By Software Type ($MM) $1,500 $1,200 $900 $600 $300 $0 $33 $147 $315 $526 $748 $944 $1,167 $1,500 $1,200 $900 $600 $300 $0 $ 33 $ 147 $ 315 $ 526 $ 748 $ 944 $ 1,167 $300 $225 $150 $75 $0 Market participation r
Slide 30: Gross margin expands with increasing scale and software growth
Gross margin expands with increasing scale and software growth Pro Forma Gross Profit by Type ($MM)(1) $600 $ 483 Gross Margins Driven by Increasing Software Margin(2) 60 % $450 $300 As Stem’s AUM grows, software becomes material portion of gross profit $ 169 $ 264 $ 360 45 % 30 % 18 %18 % 16 % 26 %
Slide 31: Stem delivers consistent growth and improving margins
(1) Stem delivers consistent growth and improving margins ~88% of Forecasted 2021 Revenues From Executed Contracts Source: Stem. Note: Stem’s fiscal year is 31-Dec. (1) Pro Forma Gross Profit adjusted for non-recurring, non-system related items and amortization related with product development (IDS)
Slide 32: Detailed transaction overview
Detailed transaction overview Transaction Highlights Star Peak has ~$383MM in cash held in the trust account Cash Sources•PIPE size of $225MM Sources $MM % Uses $MM % Committed Equity PIPE 225 17.9% Stock to Stem Shareholders 650 51.7% Star Peak Trust 383 30.4% Estimated Fees and Expenses 51 4.1% St
Slide 33: Public comparable universe
Public comparable universe Solar Technology Solutions Distributed Solar Sustainable Infrastructure Diversified Energy Tech Stem Peers Relevance to Stem Robust upfront cash generation Serves similar end markets Diversified long-term contracted cash flows Increasing BTM storage attachment rates Upfron
Slide 34: Operational benchmarking
Operational benchmarking CY 2021E Financials ~ 350% 115% 67% 14% 63%22%31%26%53%29%47%46% Median: 31% Revenue Growth (2) Gross Margin 16% 32% 22% 38%33% 60% 18% 27%27% 31% 22% Median: 27% 2021E2022E2023E EBITDA Margin 2021E2022E2023E 17%26% 19% 80% 9% (1) 12% NM (2) NM (2) 19% Median: 18% Solar Tech
Slide 35: Valuation benchmarking
Valuation benchmarking (1) CY 2021E EV / Revenue 41.9 x 2021E 2022E 2.6 x x x 13.5 x8.1 x 27.7 x 3.0 x 11.8 x 5.2 x 14.3 x 5.6 x x EV / Revenue 2024E 1.6 x 1.1 x (2)(3)(1) CY 2022E EV / Revenue 24.0 x 20.4 x 2025E 0.9 x 4.9 x 10.7 x6.7 x 2.6 x 10.7 x 4.2 x 11.7 x 2.6 x (4) Median: 10.7 x 2026E 0.7 x
Slide 36: Valuation benchmarking (cont'd)
Valuation benchmarking (cont’d) (1) CY 2021E EV / EBITDA 75.1 x 2021ENM 33.1 x 52.1 x 42.9 x34.7 x33.6 x 43.9 x 2022E EV / EBITDA 2024E 2025E 2026E 7.3 x 4.1 x 2.8 x 2.0 x 29.1 x (2) CY 2022E EV / EBITDA 40.0 x33.9 x 29.0 x (2) NM (3) 23.9 x22.6 x NM (3) 27.4 x NMNM (4)(1) 60.3 x 29.1 x NM (4)(1) (5
Slide 37: Stem has significant upside potential
Stem has significant upside potential Enterprise Value ($MM) Post-Money $2,836 185% Midpoint Premium $ 829 $1,891 Enterprise Value 6.0x – 9.0x 2022E Revenue Source: Stem.
Slide 38: Investment thesis
Investment thesis Confidential Large Addressable Market and Strong Macro Tailwinds Exposure to Energy Transition and ESG
Slide 39: Appendix A: Supplemental Information
Appendix A Supplemental Information
Slide 40: Definitions
stem Definitions Confidential 40 Item Definition Pipeline Total value of uncontracted, potential hardware and software revenue from total opportunities currently in process by Stem direct salesforce and channel partners (see page 15) * Market particips revenue is excluded from pipeline Booking Total
Slide 41: Front of the meter market outlook
Stem has a proven track record of helping owners maximize the value of their assets, driving higher revenue FTM US Energy Storage Outlook (MWh) 30,000 25,000 20,000 17,10717,219 21,006 26,533 and ROI 15,000 14,107 Overview of Front of the Meter Market 10,000 9,679 Utilities, IPPs and other asset own
Slide 42: Behind the meter market outlook
Stem delivers lower net bill and clean power to C&I customers BTM US Energy Storage Outlook (MWh) 3,500 3,000 3,043 Overview of Behind the Meter Market Commercial, industrial and corporate customers Typically 10 year software contracts System spec size of 2.2MWh and $1MM Wholesale market participati
Slide 43: International markets with expanding TAM
Transaction capital will fuel growth into international markets with expanding TAM Worldwide Energy Storage Outlook (Ex-US) (MWh) 30,000 25,000 21,233 26,630 Overview of International TAM System cost declines and demand for renewable energy have led to increasing system durations and MWh capacities
Slide 44: Global energy storage growth remains robust long-term
Global energy storage growth remains robust long-term Overview of Global Growth Trends All major global markets forecasted at double digit storage growth rates over the decade US and China lead energy storage growth with Global Energy Storage Outlook (GWh) 200 180 160 140 Capacity (GWh) 100 80 6048
Slide 45: GAAP Income Statement
GAAP Income Statement ($000s) Year Ended December 31, 2019 Source: Stem financials.
Slide 46: GAAP Balance Sheet
GAAP Balance Sheet ($000s) Year Ended December 31, 2019 Assets Current assets: Source: Stem financials.
Slide 47: GAAP Balance Sheet (Cont'd)
GAAP Balance Sheet (Cont’d) ($000s) Liabilities and Total Equity Current liabilities: Year Ended December 31, 2019 Common stock, $0.000001 par value, 386,728,323 shares authorized as of December 31, 2019; 9,392,682 shares issued and outstanding as of December 31, 2019 0 Additional paid-in capital 3,
Slide 48: GAAP Cash Flow Statement
GAAP Cash Flow Statement ($000s) Year Ended December 31, 2019 Cash flows from operating activities: Cash flows from investing activities: Net cash used in investing activities$(54,237) Cash flows from financing activities: Net cash provided by financing activities$ 67,201 Effect of exchange rate cha