The pieces of the jigsaw are coming together for SunEdison.
The US solar giant and its subsidiary yieldco TerraForm completed their $2.4bn buyout of wind developer First Wind in January. This created the world’s largest renewable energy developer, and has given SunEdison a way into building wind in the US, Europe, Asia and South America. First Wind has 16 wind farms totalling 1GW.
And SunEdison last week announced a takeover of a four-year-old technology start-up in a deal that is in many ways as significant for wind as that First Wind buyout. SunEdison is set to buy Solar Grid Storage, which makes battery storage systems for solar schemes, for an undisclosed sum. SunEdison sees the potential to use this tech on solar and wind farms.
These acquisitions appear to fit together very neatly.
Let’s look at Solar Grid Storage. The company was formed in 2011 and partly funded with $250,000 of venture capital from the Ben Franklin Technology Partnership. It currently has four energy storage projects, but SunEdison is not buying this start-up for those projects. No, it mainly wants access to Solar Grid Storage’s intellectual property and technology.
If battery storage is done properly then it can offer clear benefits to wind investors. It enables them to store excess energy at windy times and sell it to the grid when the conditions are less windy.
This helps wind farm owners to store and sell energy that would otherwise be lost; and also enables them to sell energy to the grid when it is most needed — which means that they can command higher prices for the energy they are selling. This is a smart move for investors that want to maximise the returns from their projects.
The problem is that so far battery storage has been much better in theory than practice, and First Wind is among those who have literally been burned.
In 2012, it had to shut its 30MW Kahuku wind farm in Hawaii due to a large fire at a battery storage facility by Xtreme Power. First Wind opted not to use battery storage when it reopened Kahuku.
The cost of this fire was an estimated $30m and clearly it is hugely expensive for investors to have a project offline. It is natural that most investors would be unhappy for the financial performance of their project to rest on somebody else’s energy storage technology.
This is what makes this Solar Grid Storage deal so interesting. It shows that SunEdison wants to bring that knowledge in-house and take control over this aspect of the scheme. We expect to see more deals like this as other renewables investors seek that certainty.
Of course, Solar Grid Storage is still a small business. We haven’t seen evidence that it can provide a battery storage scheme capable of coping with a utility-scale wind farm. It may take years for it to get to that stage but, with the right support, it should do so. That would be a great boost for investors in wind farms.
For wind’s long-term future this is a vital piece of the jigsaw.
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