Was 2017 the Year Global Energy Giants Went All-In on the Distributed Energy Revolution?
The year in cleantech, energy storage and grid edge M&A.
It’s been an interesting year for mergers and acquisitions in the distributed energy space, with some unexpected developments.
We haven’t seen the same massive M&A deals of years past, such as GE’s purchase of Alstom or Honeywell’s acquisition of Elster — although Tuesday’s announcement that smart metering and utility software provider Aclara was being sold for $1.1 billion to Hubbell Inc. helped bring this year’s total closer to the peaks of the past.
But when you look at the activity in 2017, a pattern emerges.
Over the past year, we’ve seen a number of major European energy companies — and some Japanese, American and Israeli ones as well — buy into the proposition that providing distributed energy technologies and services to their customers will be a significant part of their futures.
This pattern stands out most clearly in the big European energy giants’ shopping spree this year, starting with Enel’s purchase of Demand Energy in January and closing with Centrica’s purchase of REstore in November.
In between, we’ve seen Total, E.ON, Engie and Shell also make significant acquisitions ranging from demand response and electric-vehicle management to energy storage and the connected home.
Only a handful of these acquisitions have publicized their purchase price, including Enel’s $300 million purchase of demand response provider EnerNOC, Centrica’s $81.4 million purchase of REstore, and Ormat’s $35 million for Viridity Energy. This makes it difficult to calculate total values for the year’s M&A activity compared to multi-billion dollar deal of the past.
But the pace of M&A activity, plus the observations of industry insiders, indicates that European utilities are in a bit of a land grab for acquisitions that can help them break into competitive distributed energy opportunities outside their core businesses — or as part of spun-out arms directly focused on the market.
Energy storage providers saw a particularly busy year in M&A, with Ormat buying Viridity Energy in February, Wartsila buying Greensmith in June, Aggreko buying Younicos out of bankruptcy in July, and Trane buying thermal energy storage player Calmac in November.
It’s also important to mention General Electric’s launch of a battery-controls package for natural-gas turbines and power plants, and the formation of Fluence, the energy storage joint venture between Siemens and AES.
The same logic pushing these acquisitions is also driving consolidation in the broader energy technology industries, from smart meters and grid sensors to operations software and data analytics. Itron’s acquisition of archrival Silver Spring Networks for $830 million, expected to be completed in early 2018, is the standout example. In this case, two U.S.-based smart grid networking players combined forces in hopes of capitalizing on smart city and IOT opportunities beyond the meter.
Smaller-scale acquisitions across the spectrum of grid edge technologies included transformer maker Ermco’s acquisition of solid-state power electronics startup GridBridge, Swiss grid giant ABB’s purchase of “mission-critical communications” provider Keymile Group, and French grid giant Schneider Electric’s purchase of automatic transfer switch maker Asco Technologies.
Here’s our month-by-month breakdown of the major acquisitions of the year.
Italian utility Enel acquired a 100 percent stake in U.S.-based Demand Energy, a developer and operator of energy storage systems and software, for an undisclosed amount.
Enel’s renewables division operates 36 gigawatts of clean energy around the world, and its North America subsidiary, which will control Demand Energy, has more than 100 hydropower, wind, geothermal and solar power plants with a managed capacity of 2.8 gigawatts. That global portfolio now has become a ready customer for Demand Energy’s storage and energy management software.
Israel-based geothermal power giant Ormat acquired Viridity Energy for $35 million upfront, plus more payable based on company milestones this year and in 2020. The purchase price was doubtless disappointing to investors in the startup, co-founded by Audrey ZIbelman, a long-time PJM executive, energy regulator for New York state, and now a regulator in Australia.
Viridity’s core software product was built to tap the energy flexibility in buildings, factories and other demand-side resources for financial opportunities in grid energy markets. But its primary assets are a set of battery-based energy storage systems, largely centered in the PJM region.
Schneider Electric scooped up Renewable Choice Energy to help it expand renewable energy offerings to commercial customers.
Con Edison’s energy services arm acquired the assets of the Northeastern solar developer Ross Solar Group.
Japanese industrial and energy giant Mitsui & Co. acquired the remainder of SunEdison’s commercial and industrial solar development business for $15 million, and renamed it ForeFront Power, with plans to expand to include energy storage and C&I energy management.
AES, a global energy company that pioneered utility-scale battery storage, made a big play for utility-scale solar. The company unveiled a plan to acquire sPower, the 10th-largest solar developer in the U.S., for $853 million in cash. The acquisition gives AES a 10,000-megawatt pipeline of utility-scale solar assets.
Engie, the energy services giant formerly known as GDF Suez, bought Dutch electric-vehicle charging management startup EV-Box for an undisclosed sum, adding to a portfolio that includes previous acquisitions OpTerra, Ecova, and the remainder of bankrupt solar company Sungevity’s European operations.
EDF Renewable Energy announced a new business unit, Distributed Electricity and Storage, building on its 2016 acquisition of groSolar to expand its efforts in North American markets. Last month, EDF won a 10-megawatt/40-megawatt-hour contract with Pacific Gas & Electric, the first big success of its strategy so far.