The coronavirus outbreak has resulted in a substantial slowdown in terms of global economic growth. The pandemic has been particularly hard on China, owing to its place as a major global manufacturing center. A large number of production facilities have either been shut down or are not operating at full capacity owing to major disruptions in raw material supply chains. These trends have also impacted stock prices in the industrial battery chargers market.

Chargers for Lithium Ion Batteries Show High Susceptibility

The pandemic has created several hurdles for lithium ion batteries. Countries which are major producers of raw materials that are required for battery production have been subject to stringent restrictions to control the spread of the virus. For instance, Australian lithium production companies have set up strict guidelines for businesses in the industry in terms of long-distance travel restrictions.

Other major producer countries in Africa and Latin America have announced nationwide curfews and quarantines in addition to trade and travel closures. These trends are anticipated to restrict the production and adoption of industrial battery chargers.

On the other hand, 2019 witnessed an oversupply of raw materials, which has mitigated losses from potential raw material supply shortages. However, continued delays and restrictions on transport are a matter of concern in the short term. While production continues apace, problems with shipping, transport routes, and container equipment are critical threats to normal operations.

Logistics Remains a Major Challenge

Companies are feeling pressure in terms of supply chain disruptions. While some countries have designated select industries in the industrial battery chargers supply chain as essential, travel restrictions imposed on workers has made day-to-day functions complex, as remote production activities have not made major inroads into the industry.

Across the world, logistics for raw materials and component supplies are expected to slow down. Consequently, industrial battery charger manufacturers are expected to invest in bringing supply chains for components geographically closer together. The global pandemic is expected to bring about permanent changes in business approaches associated with international supply chains, which can result in growing localization of charger production.

Three European Transmission System Operators (TSO) have collaborated to launch a new, blockchain-based flexibility platform, Equigy.

It is designed to allow the integration of small and distributed consumer-based assets, such as electric vehicles (EVs), residential battery energy storage and heat pumps to play a role in the grid-balancing process.

Consumers will be able to use Equigy to earn money by flexing their interaction with the electric grid via an aggregator. This will help enable greater integration of intermittent renewables into the grid by increasing the TSOs ability to balance generation through flexibility.

Currently three TSOs – Swissgrid, TenneT and Terna – are launching the platform in the Netherlands, Germany, Italy and Switzerland. Additionally, Denmark’s Energinet has expressed an interest in joining the consortium, which would further extend the rollout.

Equigy is designed to be non-exclusive and can work with other balancing systems. This helps to provide a viable collective approach, said the consortium, offering standardisation, a common approach from TSOs with neutral governance and the opportunity for scaling-up.

A press release said that “batteries from millions of households will stabilise the electricity grid in the future,” with the Equigy platform using blockchain technology – which creates a secure, distributed and transparent ledger of all transactions – to allow the capabilities of even small household systems of a couple of kilowatts to be aggregated to deliver the services traditionally supplied by large-scale fossil fuel generation. TenneT has previously hosted a couple of related ‘virtual power plant’ (VPP) trial projects in Germany and the Netherlands with residential battery storage manufacturer sonnen, while Terna has already enabled distributed energy resources such as home batteries aggregated into VPPs to participate in some grid-balancing opportunities.

Everybody knows that coal is on the way out, but the latest electricity report from BloombergNEF is something of a shocker. It casts a shadow of gloom over natural gas, too. Low-cost renewables are creeping into gas territory, helped along by falling costs for energy storage. In fact, according to BNEF, energy storage is now a cheaper alternative to building new gas “peaker” plants in some regions. And by some they mean Europe, which was supposed to be a lifeline for US gas exporters.

Natural Gas & The European Connection
BNEF cautions that the new report is based on data from recent months and does not fully reflect the longer term impact of the COVID-19 global economic crash. Nevertheless, the findings are rather juicy from a geopolitical point of view.

During the Obama administration, the US engaged in a concerted effort to help Europe reduce its dependence on Russia for natural gas. The first step was to restrict limitations on exporting liquid natural gas from the US, and boy howdy did that open the floodgates.

According to the US Energy Information Agency, by July 0f 2019, the US had become the third-largest LNG exporter in the world, surpassed only by Australia and Qatar.

The lion’s share of all that had been going to Asia, but in January of 2019 — after something of a kerfluffle with China over tariffs — US exports to Europe topped Asia for the first time ever.

The Energy Department’s latest monthly LNG export report reflects that trend. As of February 2020 three of the top five countries of destination were EU members, topped by the UK with France and Spain following. Japan and Turkey were the non-EU members in the top five.

As of last summer EIA was still expecting demand in Europe to continue increasing, mainly as a consequence of decarbonization efforts.

It certain seems that gas stakeholder are counting on that. With the help of new LNG facilities coming on board in the next few, the US will end up with the biggest LNG export capacity in the world.

Tesla (NASDAQ:TSLA) has always said that non-auto revenues are planned to equate to 50% of revenues long-term for the company. Tesla does not regard itself as specifically an auto company as many erroneously state.

As my article in February detailed, last year showed strong growth in their energy storage business. This has a wide geographical spread and a wide usage. However, the full potential was not realised. This was primarily due to the need to divert battery production to meet soaring Model 3 demand. At the Q3 earnings update and analyst call last year, Elon Musk emphasised that energy storage supply was now back at the front of the agenda. Non-auto products were targeted to meet 50% of company revenue.

The company’s vertical integration advantages should drive this business strongly forward. Vertical integration and diversification can drive incremental revenue and provide risk protection in these uncertain times. It also enables the company to spread the high fixed costs across its divisions.

The company had been hoped that this year would see the supply/demand equation balancing out. COVID-19 puts this in doubt. We will have to see how long U.S. factory shutdowns last, how much demand is postponed due to the economic fallout, and how quickly the company can ramp up production in China.

Energy storage does nevertheless represent an under-rated potential for revenue growth, which is not reflected accurately in the stock price.

Battery Developments & Renewables
My article here detailed some of the fast-moving developments. All the forecasts show the very rapid growth of the sector. This is happening as renewables take an ever-increasing share of the energy market and as battery costs fall. Lithium-ion battery costs have fallen about 85% in the last decade.

Lithium-ion will dominate for some time but batteries will continue to get cheaper and more efficient. There is enthusiasm from different quarters for new developments such as solid state batteries, potassium-based batteries, and flow batteries. It will be some time before commercial alternatives to lithium-ion get developed.

While a large portion of our thinking at the moment is shaped by a tiny but potentially deadly virus, we thought it might be preferable – for a few minutes at least – to think about a bigger picture topic: why battery energy storage and solar-plus-storage have become such a key part of the US energy industry in a way that they have not in Europe, as yet.

Corentin Baschet, an expert at technical consultancy and market analysis firm Clean Horizon is based in France and took some of our questions. We’ve already spoken with Baschet about the energy storage market in France, which, after the success of solar-plus-storage tenders on its island territories is deploying several large-scale batteries on its mainland in an experimental phase and has opened up a limited Capacity Market opportunity for low-carbon assets, including batteries.

France is also part of the European six nation shared frequency regulation market – which we heard more about from Corentin Baschet in our discussion of why energy storage deployment in Europe experienced a 2019 slowdown but is expected to bounce back and then continue to grow in the coming years. Of course, as we’ve seen in the past few months with COVID-19, everything can change rapidly, and in Europe the EU Clean Energy For All Europeans package could be an equivalent to a US Green New Deal in terms of overarching policy. For now, here’s what Corentin Baschet of Clean Horizon sees as as some of the main differences.

E-S.n: So, taking solar-plus-storage as a starting point, why hasn’t the US’ experience of year-on-year record deployments been enjoyed across the pond?

CB: The markets are fundamentally different. There’s a lot of frameworks to support that in the US, the investment tax credit (ITC), a whole lot of initiatives to support PV-plus-storage deployment which we don’t have in Europe. So it’s really driven by the incentives and the regulation in the US. Whereas in Europe it’s not really the case.

Flow battery technology in energy storage could eventually replace or compete with diesel generation and lithium ion as part of a microgrid package but needs to improve on load reliability and cost-competitiveness.

This conclusion ends a new report by renewables and energy efficiency firm Ameresco. The company is working with 2ndPath Energy on U.S. Department of Defense-funded research into vanadium redox flow (VRF) battery energy storage systems as an alternative for diesel generators (DG) in microgrid applications.

“First, based on assessment of the reliability modeling results and critical load coverage curves produced, we can conclude that a VRF battery enabled microgrid can provide satisfactory reliability performance at all five sites by meeting the baseline performance requirement over a 168-hour outage that could occur at any time,” reads an executive summary of the Ameresco-2ndPath Energy report.

“However, we can also conclude for all five sites that critical load coverage at 168 hours was below the variable load DG-only coverage by between 1.6% to 3.0%,” the executive summary added. “This is to be expected since the newer VRF technology is assumed to have lower reliability factors that the DG technology.”

Vanadium redox battery technology utilizes the ability of vanadium ions in solutions in various oxidation states to store potential energy. It has been studied for years but has not found a way to market at scale.

Lithium-ion battery technology, meanwhile, dominates the energy storage landscape and makes up more than 90 percent of the U.S. battery storage installed capacity. VRB offers the potential for a competitive, comparative solution but not yet.

Companies across the global renewable energy industry are anxiously assessing the negative impact of the coronavirus outbreak on their bottom line. Every company, it seems, except NextEra Energy.

NextEra, the leading U.S. renewables developer, reported its first-quarter financial results on Tuesday, saying that not only has its renewables development unit been unaffected by the COVID-19 pandemic, but it may actually benefit by being able to scoop up other projects that run into trouble.

NextEra expects to build around 5 gigawatts of renewables capacity this year, and it added another 1.6 gigawatts of wind, solar and storage to its pipeline during the first quarter. None of its 2020 projects are expected to be delayed.

The company also made a stunning, if not entirely surprising, prediction: It will spend $1 billion on battery projects next year. NextEra believes it will be the first company in the world to cross that threshold for energy storage investments in a single year.

That investment will include the 409-megawatt Manatee Energy Storage Center in Florida that NextEra announced last year, which will be powered by solar panels and replaces a pair of aging natural-gas-fired plants.

In addition to building renewables through its Energy Resources development arm, NextEra is adding wind, solar and batteries through its regulated utilities, Florida Power & Light and Gulf Power. FPL alone expects to add more than 10 gigawatts of solar capacity during the 2020s as Florida’s solar market consolidates its position as one of the country’s most important.

Energy Resources reported first-quarter adjusted earnings of $529 million, or $1.08 per share, up from $467 million, or $0.90 per share in the year-ago period.

Energy storage net energy metering (aka NEM paired storage) allows a customer with a behind-the-meter solar + storage system to discharge their battery, exporting stored energy back to the grid and receive a net energy metering credit, if the battery can verifiably charge 100% from solar. In certain cases, NEM paired storage can meaningfully increase the amount of savings an energy storage system (ESS) can capture. As illustrated in the graphic below, energy storage net metering effectively enables a battery to utilize its full capacity by discharging fully when a strong price signal exists, regardless of customer usage.

Policy background
NEM paired storage was codified into law in California in February of 2019 when the California Public Utilities Commission (CPUC) finalized a decision permitting customers with ESS to receive credits for storage energy sent back to the grid if the storage system verifiably charged entirely from solar. The policy change was initiated by the California Solar and Storage Association (CALSSA) who filed a petition for modification (PFM) to grant the permissibility of NEM paired storage. CALSSA’s PFM drew support from California’s big three investor-owned utilities who filed a statement of support, which helped pave the way to the CPUC decision. Energy Toolbase published a blog “CPUC Approves Energy Storage Net Metering” summarizing the eligibility requirements laid out in that CPUC ruling.

Several months later the IOUs began allowing NEM paired storage systems to be interconnected to their grid. Energy Toolbase published another blog in December of 2019 entitled “California Utilities now Accepting Applications for Net Energy Metering (NEM) – Paired Storage,” which summarized many of the new metering and verification requirements, including the newly created Certification Requirements Decision (CRD) standard, which allowed utilities to verify the ESS charges entirely from PV. Previously, for ESS systems larger than 10 kW, customers were required to install additional metering hardware, which could be time-consuming and prohibitively expensive.

Case Study: NEM Paired Storage
To illustrate the value of energy storage net metering, we compared two identical solar + storage systems operating in time-of-use (TOU) arbitrage mode. We held all project inputs and assumptions constant, except in Case No. 1 we ran the ESS dispatch simulation assuming ESS cannot export to grid, and in Case No. 2 we ran the simulation assuming NEM paired storage: ESS can export to grid, but it must charge entirely from PV.

In Q1 2020, $252 million was raised by battery storage, smart grid, and energy efficiency companies, a 20% increase from the $210 million raised in Q1 2019. This is according to a new report by Mercom Capital Group.

Battery Storage
Total corporate funding (including venture capital, debt, and public market financing) in battery storage came to $244 million in nine deals compared to $635 million in 10 deals in Q4 2019. Funding was up 88% year-over-year (YoY) compared to $130 million in nine deals in Q1 2019.

VC funding (including private equity and corporate venture capital) raised by battery storage companies in Q1 2020 came to $164 million in six deals compared to $78 million in seven deals in Q1 2019. Quarter-over-quarter funding was also higher compared to $126 million in seven deals in Q4 2019.

According to the report, the top VC funded battery storage companies this quarter were:

• Demand Power Group, which raised $71 million from Star America;
• Highview Power raised $46 million from Sumitomo Heavy Industries;
• Advano raised $19 million from Mitsui Kinzoku SBI Material Innovation Fund, Future Shape, PeopleFund, Thiel Capital, DCVC, Y Combinator;
• ZincFive raised $13 million from 40 North Ventures, and
• TWAICE raised $12 million from Creandum.

A total of 14 investors participated in battery storage funding this quarter. In Q1 2020, announced debt and public market financing for Battery Storage technologies was 54% higher YoY compared to $52 million in two deals in Q1 2019. One battery storage project fund of $140 million was also announced in the quarter.

There were four M&A transactions involving battery storage companies in Q1 2020 (no transaction amounts disclosed). There were no M&A transactions in Q4 2019. There were four M&A transactions in Q1 2019, of which only one disclosed the transaction amount.

While the renewable energy industry has suffered significant blows such as loss of employment during the COVID-19 crisis, venture capital (VC) funding into the battery energy storage sector in the first quarter of this year nonetheless saw a significant increase over the previous year’s equivalent period.

Corporate funding overall was in fact up 88% year-over-year in Q1 2020 to US$244 million over nine deals, from US$130 million in the first quarter of 2019 from the same number of deals, according to the latest funding and mergers and acquisitions (M&A) report from Mercom Capital Group. The company tallies up and publishes its quarterly report into funding and M&A activities in the battery storage, smart grid and energy efficiency sectors, including VC funds and their investments.

While it shows a big increase since the beginning of last year, momentum has dropped from the previous quarter when a massive US$635 million of funding went into the battery storage sector. That said, VC funding appears to be trending upwards: in Q1 2019, seven VC funding deals totalled US$78 million, in Q4 2019 seven VC deals netted companies in the sector US$126 million, whereas in the Q1 period of 2020, US$164 million was raised across just six deals by battery storage companies.

Energy-Storage.news reported in February that US developer EsVolta had secured a US$140 million credit facility for a project portfolio with industry debt financing specialist CIT the Mandated Lead in arranging it, and Mercom Capital noted that that amount raised made it the most noteworthy project financing transaction to close in the quarter. That said, this site also reported that AES Distributed Energy raised a much larger amount – US$341 million – in a transaction announced at around the same time as EsVolta’s, although the AES Distributed Energy deal was for debt financing.

Mercom Capital also noted that some significant M&A deals were announced in the sector, the most notable being the acquisition of the commercial and industrial (C&I) arm of Canadian developer NRStor by Blackstone Energy Partners.

While the full Mercom report includes more details and provides more depth on the quarter’s activities, a release seen by Energy-Storage.news did rank the top five battery storage sector deals by amount raised. These are as follows: