AES and Siemens Partner to Create New Energy Storage Powerhouse
Two of the biggest names in energy storage development have decided to join forces.
AES, a leader in megawatt-hours deployed, will launch a new company along with global energy systems provider Siemens. The jointly owned venture, dubbed Fluence, will scale up commercial and grid-scale storage deliveries worldwide.
The unprecedented move marks a preemptive consolidation of power in a young industry — and a new competitior for emerging market leader Tesla.
AES started deploying large, utility-scale storage a decade ago, making it a seasoned veteran in the new and emerging advanced energy storage world.
The major independent power producer deployed its own projects in PJM’s frequency regulation, and gradually transitioned to selling its Advancion system to third parties. The company recently completed the largest lithium-ion battery to deployed date for San Diego Gas & Electric as part of the Aliso Canyon gas leak response.
It could have kept going with the same game plan. But early leaders of emerging markets don’t always retain that lead. With Fluence, AES hopes to solidify its position amid an increasingly bustling competitive landscape.
“We have to massify this product to continue to bring down costs,” said AES CEO Andrés Gluski, in an interview. “On long duration systems, we think we’re the most competitive in the market, but we’ll be even more competitive if we’re even larger.”
For more than a century, Siemens has built the heavy-duty equipment that drives the grid, like generators and balance of plant devices. In the storage space, it has focused on commercial and industrial development for the last five years with the Siestorage product, and will bring that expertise to the joint venture.
Perhaps more consequential, though, is the company’s global footprint, which includes a sales presence in 160 countries with deep ties to utility, industrial and commercial customers.
“If you look at our energy business, we’re very well connected with all the leading utility players in the world,” said Dan Wishnick, sales and business development manager at Siemens Energy. “It’s a rare customer we haven’t touched in some shape or fashion.”
That should open up considerable room to expand on the seven countries AES has installed storage in so far.
That boots-on-the-ground presence may prove to be Fluence’s biggest advantage over the competition, said Ravi Manghani, storage director at GTM Research.
“There are several positives — close to instantaneous product-to-market capability, prompt post-sales servicing which can result in improved system uptime and availability to participate in multiple markets,” he said.
The two companies will contribute more than 100 personnel to the joint venture, which will be headquartered in the vicinity of Washington, D.C. The new leadership team has not been announced. AES and Siemens will each own half of Fluence, but the new venture will operate on its own, free to focus exclusively on chasing the storage market.
The name was chosen to convey expertise and familiarity with the product.
“Both of our organizations felt a certain fluency in our space, and we wanted to own that and wrap that around us as being people who have worked in energy storage for many years,” said Steve Coughlin, vice president for energy storage platforms at AES.
The nomenclature also reflects the confluence of two separate organizations into one, and references a technical concept in particle physics, he added.
Siemens has also conducted demonstration research on battery types other than the conventional lithium-ion. The company worked on three flow battery projects in Massachusetts, and served as EPC and integrator on Europe’s first large-scale sodium sulfur battery system.
It has an ongoing integrator relationship with Eos, which is developing a proprietary zinc hybrid cathode battery for long-duration storage. Siemens is conducting a field test of that technology at its campus in Alpharetta, Georgia.
AES has focused exclusively on lithium-ion chemistry, which dominates almost all grid storage capacity today. The scale and bankability of this technology will give it an edge for the near future, but these research efforts could help Fluence to tap niche markets that demand a different solution.
“The market is ever changing,” Wishnick said. “If you stand still with a particular technology, I don’t care what business you’re in, you run the risk of not advancing what you’re doing.”
This won’t be the first time Siemens has taken the plunge into an emerging clean technology. The company entered the concentrating solar power space with its $418 million purchase of solar trough company Solel in 2009.
The latter firm fared poorly in competition with cheap solar PV and natural gas. In 2013, Siemens laid off most of the remaining staff after failing to find a buyer for it.
