Energy storage firm Stem is taking on new owners and liquidity as it aims for greater share in the growing battery storage gains market of the coming decade.

Stem announced that it was combining with Star Peak Energy Transition Corp., a blank check company created to effect a merger, in a transaction estimated at about $608 million. Star Peak includes investments from funds managed by private equity firms such as BlackRock, Adage Capital Management, Electron Capital Partners and Senator Investment Group.

Once the deal closes as expected in the first quarter of 2021, the equity value of the new formation should be close to $1.35 billion, according to release. The cash influx will enable Stem to capitalize on growth opportunities, including advancing its Athena software platform.

“This transaction is transformative for us and we expect it to significantly accelerate our growth,” John Carrington, Stem CEO, said. “Stem is a market leader and our Athena™ software platform is proven in the U.S., Japan and Canadian markets, and this merger will enable expansion to several additional global markets.”

Founded in 2009, Stem has deployed more than 600 MWh of energy storage capacity commissioned in the past six years. The Athena system is contracted or operating in more than 900 systems in 200 cities, according to the company y.

Stem offers an artificial intelligence (AI) software platform for battery storage systems. Its products have operated globally with more than 40 utilities.

Around 2.1GWh of battery storage had been installed in Germany by the end of 2019, in households, at commercial and industrial (C&I) facilities and at large-scale in grid-connected applications.

While the home energy storage market and industrial segment both grew last year and are expected to continue growing, the large-scale segment slowed down and saw just nine projects deployed in the country during 2019, according to research gathered and analysed by academics at RWTH Aachen University, research group Forschungszentrum Jülich and battery expert group ACCURE.

Economics are challenging for large-scale projects

In 2018, 22 large-scale projects (>1MW rated output or >1MWh capacity) went online. This slowdown at grid-scale came largely as a result of the falling revenues battery project owners and investors can expect from providing frequency containment reserve (FCR). The research team pointed out that FCR is almost the sole source of financing for large-scale storage in Germany, meaning that the saturated nature of the market makes the economics more challenging.

In other words, it could be said that batteries are a victim of their own success, having been able to provide the vital grid-balancing service quickly and efficiently and subsequent competitive auctions for FCR have pushed prices down. The market rose quickly and there had been 68 projects installed by the end of 2019 cumulatively, adding up to 400MW of power and 620MWh of capacity. The nine projects added in 2019 totalled 54MW / 62MWh.

Prices declining to around €1,000 MW/week (US$1212) at the beginning of 2020 from around €1,500 the year before have made the market “increasingly unattractive to new participants”, the research paper: ‘The development of stationary battery storage systems in Germany – status 2020’, said.

However some promising developments are on the horizon in the near term. Earlier this year the German network regulator Bundesnetzagentur approved proposals by grid companies to create so-called ‘virtual transmission lines,’ in a big undertaking called GridBooster. As the paper points out, this should include two projects of 100MW / 100MWh each and another of 250MW / 250MWh providing redundancy and spare capacity to large transmission lines.

The transport sector is one of the principal producers of greenhouse gas emissions in the UK. This, and the UK government’s pledge to reach net-zero CO₂ emissions by 2050, has catalysed the expansion of the electric vehicle (EV) market in recent years.

Due to this increase, the number of end-of-life EV batteries are predicted to surge in the coming years.

An EV battery is generally considered to be ‘end-of-life’ when its capacity has declined to approximately 80% of its original value.

However, these spent batteries are now attracting attention from battery manufacturers and start-up companies, with their significant remaining capacity offering huge potential for use in a secondary application.

Due to the current economic and infrastructural issues faced of widespread lithium-ion battery (LiB) recycling, the second life battery (SLB) market provides a promising opportunity to deal with early generations of spent EV batteries – particularly in stationary energy storage (SES) applications.

Why do we need stationary energy storage? 

SES is vital in times where electricity supply is in substantial demand.

SES can be used commercially, residentially, and industrially, in applications including charging infrastructure, off-grid energy supply, or even street lights.

SES ensures energy can be bought and stored in periods of low demand, when it is cheap, to then be used in times of high demand.

Though they are not currently using SLBs, Pivot Power, a UK-based start-up SES company, are committed to developing the world’s largest battery storage and EV charging network using stationary technology.

According to the latest edition of Wood Mackenzie’s U.S. energy storage monitor, the country deployed 476 MW of energy storage in Q2, 240% more than was installed in Q2, which just so happened to be the previous quarterly record for installed capacity. That 476 MW mark represents more than 500% year-over-year growth from Q3 2019.

The jump in capacity forced WoodMac to edit the y-axis on it’s deployment graph, producing a pretty funny result:

As the graph shows, this exponential capacity increase was driven predominantly by the front-of-the-meter (FTM) market, with that segment alone representing more capacity than the total installations across all segments in any other quarter from the past 7 years.

Beyond MWs

Pure MWs installed, however, are not the main focus of deployed storage, with the other half of the story being told by MWh deployment. What’s interesting here is that, while the 764 MWh deployed in Q3 is a record in its own right, more than doubling the previous record of 378 MWh in Q4 2018, that figure is less than double that of the 476 MW installed, yet most batteries are developed for four-hour charge or discharge.

The answer to this oddity comes from California, where numerous installations were built for only one hour of capacity, though many were also planned or built with the capability to move to four-hours in duration in the future. This phenomenon includes LS Power’s Gateway Energy Storage project, the largest grid battery in the world, clocking in at 230 MW and 230 MWh, with plans to expand to 250 MW/250 MWh.

Just as it was with MW deployed, FTM installations drove this record quarter, with additions growing 475% compared to Q2 and beating the previous FTM record, set in Q1 2017, by nearly 200%.

Zero-carbon electricity from wind and solar is great for the climate. But because the wind doesn’t always blow and the sun doesn’t always shine, it can be a headache for grid operators who have to make sure electrons are flowing steadily to homes and businesses. The solution is energy storage: big batteries that can capture and release power from intermittent sources when it’s most efficient.

The scale-up of storage has been steady, but slow over the last several years. But in the last three months, the US energy storage market has absolutely boomed, according to new data from Wood Mackenzie—giving renewables a major boost in the fight to displace fossil fuels.

The third quarter of this year smashed the record for new US battery installations, beating out the second quarter (the previous record) by 240%. The charge was led by “front-of-the-meter,” also known as utility-scale, systems, as opposed to batteries on homes, businesses, or factories.

That’s a sign that power companies, and not just climate-minded individuals, are laying the groundwork for a much cleaner grid—which is essential, since the grid accounts for at least one-quarter of US carbon emissions. And the grid is expected to shoulder even more of the overall energy burden as cars, heating systems, and other points of fuel consumption go electric.

The majority of the new installations were in California, which not only has one of the country’s biggest existing fleets of wind and solar farms, but also has one of the country’s most aggressive decarbonization targets: 100% zero-carbon electricity by 2045. It’s a major incentive for power companies to move early on storage. In September, the world’s largest battery came online in the state.

The electric power grid is facing a number of challenges from the technological change across the power system and increasing severity and frequency of natural and man-made threats. As the generation mix rapidly evolves throughout the country, technologies that provide additional operational support to the grid will become more valuable. Part of that process will require the industry and the government to build and validate business cases based on a firm regulatory framework that meet requirements such as flexibility, reliability, resilience, sustainability, and grid stability. This effort requires a holistic approach to identify technical and regulatory solutions that is coordinated with the industry and the government. One technology that is crucial to the next evolution of the nation’s electrical grid is advanced energy storage.

But what is energy storage really? For many people, the term “energy storage” is likely to invoke a vision of an electrical battery — and it makes sense since the majority of the utility energy storage systems deployed on the grid in recent years are batteries. However, the technology with the largest installed capacity on the grid in the United States is pumped hydro. What about other types of storage such as thermal or chemical? These technologies store energy as well. In fact, a pile of coal at a power plant or a pipeline with natural gas is energy storage. Also, technologies that do not store energy themselves but provide similar functions may work best in some scenarios. To fully assess how to support the development of energy storage, we need to evaluate all of the diverse technologies that provide the benefits of energy storage from the perspective of the functions and values that a system can provide to the grid.

One of the essential benefits of energy storage is the flexibility it adds to the power system. The electric grid is a very complicated machine and electricity is a very unique product that requires just-in-time delivery. Electricity supply must match demand at any given moment of time. In the past, that was accomplished by forecasting loads and scheduling and dispatching generation to meet demand. Today, with increasing penetration of variable renewable generation, you need forecasts for both demand and generation. While our forecasting abilities are improving, this does not overcome the issue that traditional wind and solar generation are not dispatchable resources. When you cannot fully control both sides of the system, you need additional flexibility and that is where energy storage comes in.

What are the roles of battery storage and hydrogen in the clean energy system of the future? Matthias Simolka, a consultant at Germany-based TEAM CONSULT takes a look at the roles each plays today and where we might see the dynamics go from here, with regard to everything from large-scale renewables integration to electric transport. Co-authored by Madjid Kübler, managing director at TEAM CONSULT and Jens Jens Völler, head of business unit, gas, at TEAM CONSULT. 

Renewable energy needs to be stored in order to make it available at all times and for mobile applications. In recent years, batteries and hydrogen technologies moved into the centre of attention as means of storage for renewable energies. For both technologies, stationary and mobile applications are available. But are these technologies competitors in the market and is one more advantageous than the other, resulting in the displacement of the less competitive technology? Or are they complementary and necessary for the overall energy system to maintain grid stability while integrating more and more renewable energies?

In the following, we analyse the current situation in Germany and provide an outlook for both technologies.

The German word “Energiewende” is often used, even in an international context, in conversations about the transition of the energy system from fossil to renewable energies, indicating Germany’s pioneering role in the global energy transition. The central features of the “Energiewende” are the decarbonisation of energy supply and the switch to renewable energies, which so far have been mainly taking place in the electricity system. The main challenge posed by renewable energies is their fluctuating generation of electricity, which impedes a stable and demand-actuated provision of energy. Over the years, the increasing share of renewable energies has led to higher load changes (feed-in gradients) in the power grid (see Figure 1 below).

A new three-year project allowing residential solar and batteries to trade electricity and grid services in Victoria, Australia, is aimed at creating a replicable model marketplace that could be widely expanded across the country.

The Australian Energy Market Operator (AEMO) said today that Project EDGE (Energy Demand and Generation Exchange) has been launched in partnership with electricity retail company Mondo Power and network operator AusNet Services. According to the national Australian Renewable Energy Agency (ARENA), which will financially support AEMO in rolling out the trial, initially involving about 50 residential customers in the Hume region of north east Victoria, it will be scaled up to enrol 1,000 customers, including commercial and industrial (C&I) as well as residential. AEMO said that the trial will include a minimum of 10MW of distributed energy resources (DER).  

The trial will run on its own marketplace platform, where the capabilities and capacities of solar and batteries and other DER such as electric vehicles (EVs), EV chargers and smart meters can be aggregated. These aggregated resources will be able to deliver network support services at wholesale and local levels. The state of Victoria recently extended a subsidy programme offering rebates for purchases of rooftop solar and home batteries. 

At present, large-scale facilities are able to participate in such opportunities via the National Electricity Market (NEM). However, as AEMO pointed out in a press release and accompanying fact sheet, the NEM was originally designed to facilitate one-way trade and flow of electricity from large centralised generators to consumers. The Project EDGE trial is a first attempt to create a marketplace based on a two-way flow instead.

As the oil and gas industry has become increasingly focused on reducing greenhouse gas (GHG) emissions, the concept of leveraging renewable energy sources (RES), such as offshore and floating wind farms, to provide clean power to offshore installations has gained traction. However, many hurdles stand in the way of making this a reality. Mainly, this is because of the need to offset the inherent intermittency associated with electricity generation from renewables.

In 2018, Siemens, Seadrill, and Northern Ocean took an important step toward solving this problem by implementing the world’s first lithium-ion battery solution on the West Mira drilling rig in the North Sea. West Mira is a sixth-generation, ultra-deep-water (10,000-ft) semi-submersible that will operate in the Nova Field, approximately 120 km (75 miles) northwest of Bergen, Norway. It will be the world’s first hybrid rig to operate a low-emissions hybrid (diesel-electric) power plant using lithium-ion storage technology, with DNV-GL Power Notation.

Designing lithium-ion batteries for spinning reserve and safety

The concept of using lithium-ion energy storage solutions in both all-electric and hybrid power systems is not new. However, it has not been until recent years that large megawatt-hour capacity battery solutions have been commercialized for use in marine applications. This is primarily because of the numerous technical hurdles that have had to be addressed, including high capital cost, limited battery range, lifespan and reliability, and so forth. Safety has also been a critically important factor.

Because lithium-ion batteries combine high energy materials with flammable electrolytes, any damage to the separator as a result of mechanic stress or high temperature will lead to an internal short-circuit. This causes the electrolyte inside the cell to begin evaporating, resulting in an increase in internal pressure until the electrolyte vapor is eventually released, either through a relief valve or by the bursting of the cell shell. Without protective measures in place, an explosive gas-air mixture is created and if heating is not ceased, thermal runaway takes place.

Thermal runaway poses a serious safety concern for any facility that uses lithium-ion energy storage. However, in marine vessels and offshore facilities, the risk is magnified as there are limited options for personnel to be evacuated from the area where danger exists. Also, an explosion could cause catastrophic damage to the structure.

Additionally, in oil and gas operations, combustible fuels are present, which increase the risk of fire spreading. For this reason, lithium-ion energy storage solutions used in marine environments must incorporate fail-proof design measures to ensure safety.

Battery solution: BlueVault

This was the primary design objective of the battery solution (formerly named Blue Vault) used for the West Mira drilling rig. Individual cells in battery packs are equipped with propagation protection to prevent large-scale thermal runaway. Gases produced as a result of the thermal event are ducted through the cubicle that holds the battery modules. Any thermal runaway event that occurs within the system is isolated on the cell level. A freshwater cooling system regulates the temperature in the batteries.

The cooling system is designed to work as a passive safety layer to ensure that a faulty battery cell will not propagate to any neighboring battery cells. It also keeps the battery temperature stable and helps to extend its lifespan. The latter is influenced by a variety of factors, including ambient temperature, number of cycles, depth of cycles, and so forth. The typical life expectancy of the battery system is around 10 years.