Shoals Technologies Group (NASDAQ:SHLS) executives used a Barclays-hosted webinar to outline how battery energy storage systems (BESS) have evolved, why demand from data centers is drawing increased attention, and how the company’s DC-side “recombiner” products fit into several storage use cases. The discussion, led by Barclays clean tech analyst Christine Cho, featured Shoals President Jeff Tolnar and BESS Product Line Manager Kishan Ponnadurai, with VP of Finance and Investor Relations Matt Tractenberg providing opening context.
Battery storage evolution and new data center drivers
Tolnar traced the evolution of batteries from smaller AC-coupled systems roughly a decade ago to larger, more “bankable” multi-megawatt installations as EV battery innovation accelerated, and then toward longer-duration capability as lithium pricing normalized. He said recent developments include alternative technologies beyond lithium-ion and “long duration energy storage systems” that can provide “tens if not 100 hours” of storage.
AC vs. DC coupling: tradeoffs and where Shoals fits
Ponnadurai said Shoals’ BESS products are most applicable in DC-coupled installations, emphasizing three drivers: “augmentation planning, protection, and cost.” He described augmentation as planning for future expansion, arguing that DC-coupled infrastructure is harder to retrofit later. He also said higher short-circuit protection is increasingly important as battery blocks grow and fault currents rise. On cost, he said aggregating DC blocks can reduce the number of inverters needed on a site.
On market mix, Ponnadurai said that for interconnected sites—solar-plus-storage and standalone storage supporting the grid—Shoals typically sees about “80% AC coupled and 20% DC coupled.” He said DC-coupled systems can offer lower upfront capex, a more compact footprint, and reduced conversion losses because solar DC can charge batteries on a common DC bus. However, he said AC-coupled architectures tend to win on “operational flexibility and revenue,” because solar and storage can operate independently. In DC-coupled setups, he said, operating constraints can create curtailment risk in scenarios where an owner would like to sell stored energy while solar production continues.
For data centers, Ponnadurai said it is increasingly difficult to classify installations cleanly as AC-coupled or DC-coupled because architectures are evolving, a point both speakers returned to later in the webinar.
Front-of-meter vs. behind-the-meter lines “blurring”
Cho asked whether demand is skewing toward front-of-meter (FTM) or behind-the-meter (BTM) applications. Tolnar said the distinction is becoming less clear as data center systems can primarily serve the data center while also providing buffering services back to the grid if the data center’s load drops. He added that in most cases he expects data centers to remain grid-connected, citing the grid’s redundancy and protection versus a purely microgrid approach.
Asked whether battery placement changes between ride-through and grid-buffering use cases, Tolnar said the physical placement is not necessarily different, but the initial engineering intent is. He said design decisions determine whether batteries serve primarily outage ride-through or can be used as a firming resource back to the grid, a need he said utilities and system operators are increasingly focused on due to data center impacts.
What Shoals sells: combiners, recombiners, and a roadmap toward skids
Ponnadurai said Shoals sells equipment that aggregates multiple DC circuits, including wall-mounted combiners and freestanding recombiners. He highlighted a common 4,000-amp recombiner configuration that can accept up to 16 fused inputs, and said the company is designing products to handle higher fault current levels as batteries increase in size—citing movement beyond “100-150 kAIC” toward “200, 250+ kAIC.”
He also described an optional “Multiple Load-Break Disconnect” attachment that provides individual control of inputs to support maintenance without shutting down an entire operation.
Looking ahead, Ponnadurai said Shoals’ next step is reducing footprint while maintaining power density by consolidating components onto a skid, describing “skidded power electronics” as a focus for a future launch.
Tolnar argued that Shoals’ differentiation is its ability to provide “high mix” customization at “high volume,” a capability he said the company developed in solar. He positioned Shoals between large multinationals and smaller “panel shops,” saying multinationals often push standard SKUs while smaller shops may not be able to supply the “hundreds of cabinets” a data center project can require. Tolnar also said Shoals’ customers view it as “bankable,” noting the company is a public company and “cash flow positive.”
Sales cycles, demand signals, and data center opportunity sizing
On sales cycles, Tolnar said solar-plus-storage decisions typically run “9-18 months,” grid firming can take “12-24 months” due to utility conservatism and the emerging nature of long-duration storage, and data center-related BESS deployments also fall in the “9-18 months” range. He added that he does not see “a quick turn 30-60-day sales cycle” in these markets.
Ponnadurai said current bookings are seeing the strongest pull from “backup data center specific backup and high power applications,” which he said is being driven by AI infrastructure buildout. He added that power quality and speed-to-interconnection use cases remain present but represent a smaller portion of demand and are “more cost-driven.”
Tolnar also discussed how Shoals thinks about the data center opportunity, offering an illustrative framework rather than a firm total addressable market. For a 1-gigawatt data center, he said Shoals estimates a need for roughly “400-600” recombiners depending on battery sizing. He described a broad average selling price range tied to configuration complexity and said the implied opportunity can work out to roughly $42 million to $72 million per data center by his example math, adding that Shoals has been citing “$50 million-$60 million per gigawatt” as a reasonable range. However, he said Shoals cannot yet provide a TAM for data centers because it is too early to know what portion of the estimated “10-15 gigawatts per year” U.S. data center market will adopt BESS in this way, and what configurations those systems will use.
When asked whether the data center opportunity looks larger today than it did months earlier, Tolnar said it is “significantly up,” calling it substantially larger than the solar-plus-storage and grid-firming use cases and saying it is “moving faster,” though the adoption curve remains uncertain.
On competition, Tolnar said Shoals competes with Eaton, Schneider, and Siemens, but believes its customization at scale is a key differentiator. Ponnadurai added that off-the-shelf cabinets may come with lower short-circuit ratings, while Shoals designs with higher short-circuit needs in mind.
Cho also asked about margins by use case. Tolnar said the margin profile is consistent across the three use cases discussed and “accretive to the solar margins.”
Finally, Tolnar outlined a separate product concept for “inside the data center,” describing how data centers are typically powered with busway systems or “whips.” He said Shoals is developing a solution using its “big lead assembly” (BLA) concept—tested for data center AC environments—that would run along rack rows with drops into a tap-off box feeding the rack. Tolnar said the company believes the system can reduce labor and shorten lead times compared with busway. Ponnadurai added that using BLA cables can mitigate short-circuit risk versus other approaches.
About Shoals Technologies Group (NASDAQ:SHLS)
Shoals Technologies Group, Inc is a leading provider of electrical balance-of-system (BOS) solutions for the solar energy industry. The company designs, engineers and manufactures a comprehensive portfolio of products, including junction boxes, combiner boxes, cable assemblies, power distribution units and monitoring systems. These components are critical to interconnecting photovoltaic modules, optimizing energy output and ensuring safe, reliable performance across solar installations.
Founded in 1996 and headquartered in Portland, Tennessee, Shoals has grown its manufacturing and operations footprint to serve customers around the globe.
