Global M&A trends and risks
Powerful new forces shaping in the M&A landscape
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Global | Publication | septiembre 2016
Since the publication of the second edition of our E-Storage Updater, the global buzz in the energy storage sector has been predominantly focused on opportunities in electric vehicles (EVs) and the application of blockchain technology.
As public policy surrounding EVs starts to emerge, so too is commercial activity increasing. Most recently Sony has moved into the EV sector, joining Panasonic, LG Chem and BYD. Vehicle manufacturers are also increasingly turning to EVs; in the last month Daimler has signed a supply agreement with North Star Battery, and Volkswagen has put vehicle electrification at the heart of its 2025 strategy.
As distributed energy and energy storage looks set to disrupt the traditional utility business model, researchers globally are considering how blockchain technology can revolutionise these models. A new, fast and computer-automated way of undertaking energy transactions, combined with high penetrations of distributed generation and storage technology has the potential to revolutionise power markets.
The background context continues to be the diversification into storage by utilities, automobile manufacturers and oil and gas companies. Innogy SE, the renewable energy subsidiary of German utility RWE, which signed a share purchase agreement to takeover the solar and energy storage business of Belectric, is an example of this. MOUs have also been signed between ENGIE and investment adviser SUSI Partners (to promote grid-scale power storage) and between Enel and Chinese automobile and battery manufacturer, BYD Ltd.
In the UK, the market for energy storage is seen as having significant potential; the Department of Energy and Climate Change (DECC), now part of the newly-created Department for Business, Energy & Industrial Strategy), had suggested that there is scope for growth of storage of up to 20 GW by 2050. In August, National Grid announced the results of the first Enhanced Frequency Response tender. As interest in the UK market grows, Norton Rose Fulbright and SgurrEnergy have joined forces to review some of the key legal and technical issues relating to the development of electrical energy storage alongside existing and future renewable energy projects in the UK. This article, Scaling up energy storage in the UK, discusses the key revenue streams for those considering investing in or funding energy storage in the UK. We also address planning and financing issues, together with some of the legal issues that co-locating energy storage alongside renewable generation can pose. Current interest in this sector is primarily in lithium-ion batteries, but a number of existing and developing technologies offer competition and the promise of lower costs. SgurrEnergy provides a summary of the application of different storage technologies and some of the key revenue streams.
We hope this article and third edition of our E-Storage Updater are of interest to you too, and look forward to receiving any comments, suggestions or queries you may have.
Battery manufacturers make bold moves in energy storage and EVs
Large battery manufacturers are making bold moves in the energy storage and EV sector with the announcement that Sony will finally be entering the sector. This follows the recent announcement from Samsung SDI that it has opened a battery manufacturing factory in Hungary, and aggressive growth strategies at Panasonic, LG Chem and BYD.
Aquion announces off-grid battery and solar energy project in Kenya
Aquion Energy, manufacturer of aqueous hybrid ion batteries and energy storage systems, and SolarAfrica, a leading African solar energy services company, recently announced a newly installed off-grid micro-grid at the Loisaba Conservancy, Kenya.
ViZn Energy Systems and Jabil Inala Partner to power Africa
ViZn Energy Systems, a leading provider of zinc and iron chemistry-based flow battery energy storage systems for utilities and micro-grids, recently announced that they will be partnering with Jabil Inala to offer turnkey storage solutions to the African power market. Around 600 million people in Africa do not have access to electricity, which, coupled with the lack of large centralised grid infrastructure, means Africa has good potential for the establishment of microgrids, including storage technology.
Trade Ministers from South Africa and Saudi Arabia inaugurate ACWA Power's Solafrica Bokpoort concentrated solar power project
The Bokpoort Concentrated Solar Power (CSP) Project has been officially inaugurated, developed by a consortium led by ACWA Power in the Northern Cape province of South Africa. The project has an estimated capex of R5billion and is one of the highest solar radiation footprints in the world. The completion of the project will provide 220,000MWh per annum of power to more than 200,000 homes. The plant has a thermal storage capacity of 9.3 hours of full load operation.
LG CNS to build energy storage system at wind farms in Jeju, South Korea
LG CNS will build a 27MWh energy storage system for wind power output stabilisation in Jeju, the largest of its kind on the island. The affiliate of LG Group will also establish an 18MWh and 9MWh energy storage system at the Dongbok-Bukchon wind farm and Gasisri wind farm, respectively, and manage the power storage systems for the next 15 years after the installation.
Enel signs framework cooperation agreement with BYD Co Ltd.
In July 2016 Enel SpA signed a global framework cooperation agreement with BYD Co Ltd., a Chinese manufacturer of automobiles and rechargeable batteries, for the development of joint projects in electric mobility and energy storage. The agreement will pave the way for possible cooperation on projects targeting electric buses and other transport services, as well as residential commercial and industrial applications based on BYD's lithium batteries.
Developers target Australia to test business case for home battery storage
Australia's high (but diminishing) tariffs, high solar penetration, competitive markets and strong consumer interest make it a global testing ground for rooftop solar and household batteries, but the market is still in its exploratory phase.
Trina Energy Storage Solution sets up subsidiary in Japan
Trina Energy Storage Solution, also known as TrinaBEST, a sister company of Trina Solar, recently announced it has set up a subsidiary in Tokyo, Japan. The new operations centre will offer energy storage products for residential and commercial applications with the hope of 'establishing long-term relationships with Japanese companies that share a similar vision of promoting the uses of alternative energy'.
China's Tianqi Lithium to build US$306m plant in Australia
China's Tianqi Lithium Industries is set to build a US$306m plant in Australia with the aim to open in late 2018. This will expand the Tianqi's output of lithium hydroxide, particularly for lithium batteries used in electric cars and high-end energy storage.
Nissan allegedly in talks to divest stake in EV battery business
Japanese automaker Nissan is reported to want to sell its 51 percent stake in Automotive Energy Supply Corp., which is jointly owned by NEC Corp., because it would be cheaper to buy batteries for electric vehicles such as the Leaf from other producers, according to the Nikkei daily newspaper.
ENGIE are developing renewable energy storage for power and green mobility
ENGIE is ready to overhaul the electricity industry with a new solution: hydrogen energy storage for solar power.
RWE Innogy to acquire Belectric solar and energy storage
Innogy SE, the renewable energy subsidiary of German utility RWE, has signed a share purchase agreement to take over the solar and energy storage business of Belectric at a share price agreement in the “high double-digit million euro range”. As well as focusing on the European market, Belectric’s solar and storage services expand over the MENA region, India, South America and the US, enabling RWE to signficantly widen its regional scope.
BMW is getting into home energy storage with used i3 batteries
BMW announced today that it's working with Germany's Beck Automation to use complete i3 battery packs as a home energy storage solution. As with other car companies getting into this business — notably Daimler and Tesla — the idea is to store energy from renewable sources like solar so that it's available even when energy isn't being generated. It's also useful as a backup power source should traditional power fail, for example in a storm or an area with an unreliable grid.
Statoil to trial triple revenue stream at offshore wind-storage project
Earlier this year Statoil announced it will install a pilot 1MWh lithium-ion battery system to store energy from the 30 MW Hywind pilot park off the coast of Peterhead in Aberdeenshire, Scotland (the world's first floating wind farm). The company expects that battery storage could improve the efficiency and lower the costs for offshore wind, raising the value of wind energy for both the company and its customers. Experts suggest that the investment may have further strategic value, allowing access to new revenue opportunities.
Installation of vanadium redox flow battery could revolutionise the global renewables sector in the UK
A government-funded trial of a vanadium redox flow battery the size of a shipping container has commenced on the Isle of Gigha (Scotland, UK). The developers, RedT, claim it has the potential of revolutionising the renewables sector due to its scalability and commercial viability. Although RedT is not the first to test vanadium flow batteries (Japan's Sumitomo Electric Industries and German manufacturer Gildemeister are already involved) RedT claims it can sell the batteries at half the price or less of its rivals.
Gaelectric to get EUR8.28m EU funds for energy storage project
Renewable energy and energy storage group Gaelectric is to receive EUR8.28m in funding from the EU to develop 330MW compressed air energy storage project in Northern Ireland. This is the first in a pipeline of projects which the company is developing across Europe.
ENGIE and SUSI partners have signed an MOU to finance EUR50m of grid-scale storage projects
Earlier this year, ENGIE and SUSI Partners signed a Memorandum of Understanding to promote grid-scale power storage projects. SUSI will contribute EUR50m in equity for projects that ENGIE intends to develop within the energy sector. With this partnership ENGIE aims to diversify the risk of development of new business models. It also gains access to a further source of financing for its future power storage activity.
Volkswagen’s tremendous transformation to electric vehicles
In its Together – Strategy 2025, Volkswagen has placed special emphasis on e-mobility. The group is planning a broad-based initiative: it intends to launch more than 30 purely battery-powered electric vehicles (BEVs) over the next ten years. Volkswagen estimates that such vehicles could then account for around a quarter of the global passenger car market and forecasts that its own BEV sales will be between two and three million units in 2025, equivalent to some 20 to 25 percent of the total unit sales expected at that time. In this context, the group has entered into early talks with the Germany-based solar energy firm SMA Solar about a potential energy storage business collaboration, according to recent reports.
Powin Energy selected for 2MW/8MWh energy storage project
Powin Energy, U.S. manufacturer and developer of energy storage systems, has been selected by Southern California Edison to complete a 2MW/8MWh energy storage system that should be operational in Irvine, California by the end of 2016. This is to help alleviate power loss concerns due to the Aliso Canyon natural gas leak.
Adara Power introduces the iC3 software platform for commercial energy storage
Adara Power, a privately-held Silicon Valley company is expanding its portfolio with the launch of its iC3 platform. The Adara iC3 Platform integrates battery and inverter controls with cloud-based software and a robust IoT connectivity solution. The platform will initially launch with a scalable 125kWh, 250kWh inverter and battery suitable for commercial-scale applications.
Sentinel Solar develops new energy storage system
Sentinal Solar, a Canadian owned and operated solar products manufacturing and distribution company, unveiled its new energy storage system (ESS), AHITM Wave, at the 2016 Solar Power International Conference in Las Vegas. The AHITM Wave ESS is designed for residential use on new and existing grid interactive and off-grid energy storage applications.
RES announces agreement to construct and operate the Lamesa solar facility
RES announced it will construct and serve as the operations and maintenance contractor for the 102MW Lamesa solar facility located in Dawson County, Texas. RES recently sold the project to Southern Power, a subsidiary of Southern Company.
Daimler completes US$ 500m supply agreement with North Star Battery
Daimler Trucks North America has recently entered into a 7-year agreement with Swedish American energy storage manufacturer, North Star Battery Company as the supplier of Ultra High Performance Pure Lead AGM batteries as part of the improvements being made to the next generation Cascadia truck.
Tesla reduces price of their Powerpack and commercial inverter
When it comes to energy storage, bringing the price down by as little as one per cent can open up the technology to a new market. Tesla Energy, the automaker’s energy storage division, did just that by recently reducing the price of its commercial and utility-scale product, the Powerpack, by 5 per cent and its bi-directional 250kW inverter by 19 per cent.
NEC unveils new battery system
NEC Energy Solutions recently announced it is seeking partners for a new lithium-ion Distributed Energy Storage System (DESS). The platform is scalable from 85kWh to 510kWh of capacity and offers from 30kW up to 650kW of power capability. Commercial availability of the system is expected in the first quarter of 2017 in North America.
Southern California Edison plans two 10MW battery storage projects
In September 2016, Southern California Edison filed a letter with the Federal Energy Regulatory Commission agreeing with itself to be the project developer for the Centre Install EGT Project, an energy storage facility in Norwalk, California, to be operating by December 2016.
New concept turns battery technology upside-down
A new approach to the design of a liquid battery, using a passive, gravity-fed arrangement similar to an old-fashioned hourglass, could offer great advantages due to the system’s low cost and the simplicity of its design and operation, says a team of MIT researchers who have made a demonstration version of the new battery. This new liquid flow battery, which substitutes a simple gravity feed for the traditional pump system, eliminates complexity and reduces the possibility of leaks and failures.
USA DoE Announces 16 new projects to transform energy storage and conversion
Integration and Optimization of Novel Ion-Conducting Solids (IONICS) project teams are paving the way for technologies that overcome the limitations of current battery and fuel cell products. IONICS projects will use new materials and processes to achieve advances such as increasing battery energy capacity while preventing short circuits and battery degradation. In particular, IONICS projects will work to improve energy storage and conversion technologies in three categories: transportation batteries, grid-level storage, and fuel cells.
US Trade and Development Agency supports energy storage in Latin America
In July 2016, the US Trade and Development Agency awarded a grant to Interconexión Eléctrica S.A, an electricity transmission company in Latin America, to identify opportunities for large-scale battery storage across Brazil, Colombia and Mexico.
Sonnedix launches 1.25 MWh Aquion battery project in Puerto Rico
The independent power producer Sonnedix has commissioned a grid-scale, 1.25 MWh Aquion Aqueous Hybrid Ion Battery to provide power to a 16MW solar plant in Puerto Rico. This is one of the first near grid-independent storage projects for the region.
How blockchain technology can reinvent the power grid
Increasingly, organisations are combining mesh networks with blockchain technology to solve complex infrastructure problems. Filament, an American company, is experimenting with what it calls “taps” on power poles in the Australian outback. At a larger scale, LO3 Energy is working with local utilities, community leaders, and technology partners to create a market where neighbours can buy and sell the local environmental value of their energy.
Utilities harnessing bitcoin technology for electricity revolution
Utilities are changing their business model: independent wind and solar farms are feeding into power grids in short, sometimes unpredictable intervals that require transaction systems to be more nimble and decentralized. As a result, researchers and utilities are working to adapt the cloud-based ledger system called blockchain used to track bitcoins as a replacement for slower administrative systems that require constant human input and multiple spreadsheets. Once set up, blockchain automatically records individual actions within a system, formats them, and stores the results in a secure online listing available to anyone anywhere with access. Utilities including RWE AG in Germany and Fortum OYJ in Finland are actively looking into blockchain technologies.
Update to DNV GL guidance
DNV GL officially published the GRIDSTOR Recommended Practice on Grid-Connected Energy Storage Systems (DNVGL-RP-0043) in December 2015. Since then this Recommended Practice (RP) has been widely used. As anticipated during the development of the RP, the energy storage sector has experienced rapid and significant developments and innovations and there have been a number of questions and recommendations for updates of the existing RP. Consequently, an update will be made of the existing GRIDSTOR recommended practice. A consortium of interested parties is currently being formed.
Assessing South Africa’s energy storage market
US-government-led Power Africa and its partners are increasingly seeking technologies that can integrate and store the renewable energy. To help its South African partners begin to address this need, the U.S. Trade and Development Agency has commissioned an assessment of the feasibility and market potential of energy storage technologies in South Africa. California-based Parsons Corporation is working with the Industrial Development Corporation, a South African development finance institution, on a roadmap for the adoption of energy storage technologies through 2030.
Asia Pacific energy storage market worth US$12bn in 12 years
A Pike Research report predicts that the Asia Pacific energy storage market will be worth US$12bn by 2022, with a capacity of 25GW. The 10 year Energy Storage Asia Pacific report predicts an annual compound growth rate for utility-scale battery storage of 135% until 2017, and a further 33% a year from 2017-2022.
Energy disruption: Solar plus storage to be cheaper than grid in 2017
New research from Curtin University suggests that the cross-over point between the value of solar and storage and grid prices for Australian households may occur within one year. The research was presented by the solar trading start-up Power Ledger, which is using blockchain technology (the software behind Bitcoin) to trial solar sharing business models in Perth. Combining residential solar power with battery storage, the rate of “load defection” – as opposed to grid defection – was likely to increase to the high 90 per cent levels in some instances.
European Parliament makes the case for energy storage regulation
The European Parliament’s committee for industry, research and energy (ITRE) has approved a new report that proposes amendments around electricity storage in the proposed ‘Winter Package’ legislation, due to be finalised in December. It addresses a number of regulatory and technical barriers, including discriminatory practices in network codes, where it proposes fees and taxes are applied fairly to avoid double costs for the charging and discharging of energy.
European Association for Storage of Energy public consultation on the draft Grid+Storage 10 year roadmap
The Grid+Storage consortium recently published their draft research and innovation roadmap 2016-2025, integrating for the first time energy storage issues into electricity network activities. The development of this integrated roadmap has been based on the monitoring of past and ongoing research projects and on the gathering of research and innovation needs identified by European stakeholders during 9 regional workshops.
UK Energy and Climate Change Committee urge action on energy storage
In its report on low carbon network infrastructure, the House of Commons Energy and Climate Change Committee concluded that the current regulatory conditions for storage are hindering its development and urged the UK Government to publish its plans, as soon as possible, for exempting storage installations from balancing charges, and from all double-charging of network charges.
National Grid brings forward storage projects with frequency response contracts
In the UK, the Enhanced Frequency Response (EFR) tender was awarded in August. EFR was developed to bring forward new technologies that support the decarbonisation of the energy industry by providing a fast response solution to system volatility. Previously the fastest frequency response was delivered in under ten seconds, however, battery storage technology means this response can now happen in under a second. Bids were received from 37 providers, the majority of which are from battery assets, and, of these, eight have been accepted. Of the 64 unique sites taking part, 61 were for battery assets. Contracts have been awarded on a four-year term giving providers the certainty that they need to develop this technology.
Cracking the Code: a guide to storage revenues in the UK and how to de-risk them
This report sets out the complex market opportunities for UK energy storage and recommendations to level the playing field for rapidly-developing energy storage technologies – some of which are locked out of current market arrangements. Recommendations include longer contracts from National Grid for support services like frequency response and fast reserve; designing revenue streams to enable them to be ‘stacked’ together more easily, addressing ‘revenue interface risk’ to make sure they line up technically, commercially and legally; unlocking new revenue opportunities within the distribution network; and exploring the introduction of a ‘cap and floor’ mechanism for storage assets with long lifetimes.
Obama Administration announces federal and private sector actions on scaling renewable energy and storage with Smart Markets
The Obama Administration announced new executive actions and 33 state and private sector commitments that will accelerate the grid integration of renewable energy and storage. Together, these announcements are expected to result in at least 1.3 gigawatts of additional storage procurement or deployment in the next five years.
US Senators introduce new Bill for energy storage
US senators have introduced a new bipartisan bill, 'The Energy Storage Tax Incentive and Deployment Act', that brings in invest tax credits for both grid-scale and residential energy storage systems.
United States Energy Department announces US$30m expansion of US-India partnership to advance clean energy research
The Energy Department's Office of Electricity Delivery and Energy Reliability recently announced a new funding opportunity for joint research on smarty grid and energy storage under the U.S.- India partnership to advance clean energy research. Particular focus will be on smart grid and energy storage for grid applications. US$3 million per year will be available from the US and Indian governments and will be matched by the private sector.
US on pace for historic year in deployed energy storage
According to the latest U.S. Energy Storage Monitor, the U.S. deployed 41.2 MW of energy storage in the second quarter of 2016, an increase of 126% over the first quarter of the year.
Energy storage mandate may be coming to Massachusetts
Massachusetts is on track to become the third state in the U.S. to pass targets for energy storage procurement. The legislature passed an omnibus energy bill in September 2016, which, if signed by the governor, would instruct the Department of Energy Resources to set a storage target for 2020 if they deem it to be necessary. Shortly afterwards a new report concluded that 600 megawatts of storage capacity installed by 2025 would save the state’s ratepayers $800 million in system costs.
The politics of lithium
Chile contained 54 per cent of known lithium reserves in the world as of 2015, with lithium brines in salt flats of its Atacama Desert. However Argentina – also a hotspot for lithium brines – is acting faster to capitalise on the growing demand. Following the Chilean government’s move to withdraw Soc Quimica & Minera de Chile’s (SQM) licence to exploit the nation’s vast deposits, reports are that the company chose to invest in a lithium project in neighbouring Argentina.
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