GE Ventures, the venture capital arm of General Electric, has invested millions of dollars into German battery storage provider Sonnen — the latest move by an energy services giant to buy into the growing energy storage market.
In the last month Total, one of the world’s largest oil companies, invested $1.1 billion in battery storage manufacturer Saft and French energy giant Engie acquired an 80 percent stake in battery storage startup Green Charge.
Last year Total and Constellation Technology Ventures, part of electricity producer Exelon, invested in energy storage startup Stem.
GE and Sonnen didn’t disclose the exact amount of the investment but Sonnen said it was a “mid double-digit million-euro” sum. “Sonnen is helping to reshape the energy industry,” said Jonathan Pulitzer, GE Ventures managing director in a statement announcing the investment. “We believe in Sonnen’s vision and that is why we are excited to partner to provide clean and affordable energy to all.”
Sonnen sold 2,600 units of its energy storage system, the SonnenBatterie, in the first three months of 2016 — an increase of more than 100 percent compared to the previous quarter.
“Our entire power system is in the midst of an enormous transformation right now, and as storage costs fall, batteries will increasingly be critical to reliable, sustainable, efficient power,” Lux Research analyst Katrina Westerhof told Environmental Leader. “A lot of companies supply disparate pieces of the puzzle, but there’s a big role for those who can integrate those pieces into a complete system.”
Last year GE launched a $1 billion energy services company, Current, which Westerhof says aims to be a full-service solutions provider for the power sector, focusing on commercial and industrial power customers. In April, Current bought building automation startup Daintree Networks for $100 million, moving GE into the building energy management market.
“Distributed storage makes a lot of sense for GE as it rounds out its portfolio —especially with a company like Sonnen that’s actively working on commercial demand management applications, which will jibe well with Current,” Westerhof said. “But Sonnen isn’t just a distributed storage company. Its community energy sharing model hints at a much bigger vision for its role in the future of energy, though that won’t meaningfully contribute to its revenues any time soon.”
Analyst firm IHS forecasts that the global behind-the-meter energy storage industry will generate $2.5 billion sales by 2020, representing a 33 percent compound annual growth rate between 2016 and 2020.
GE’s acquisition “further confirms its strategic focus shift away from battery manufacturing to system integration and grid solutions,” writes IHS Technology principal analyst Marianne Boust on AltEnergyMag.com. “Sonnen’s experience with PV and energy storage, as well as a strong European foothold, will enhance GE’s position on the market.”
The impetus for these energy majors moving into the energy storage and renewables space is all about risk management, according to Westerhof.
“The shifts we’re seeing in the energy space are a tremendous threat to some of our energy incumbents,” she explained. “Between renewables and vehicle electrification, oil and gas companies are facing a market that’s slowly dying off, and utilities are watching their customers increasingly generate their own power. GE is diversified enough that the threat it faces is not of the same order of magnitude — but it’s certainly seizing an opportunity to bolster the most future-proof of its energy businesses.”
Don’t miss our Environmental Leader 2016 Conference in June.