GE stake in Sonnen to benefit both companies - IHS

GE Ventures’ investment in energy storage provider Sonnen underscores how successful the German firm’s business model has become, while further confirming GE’s strategic shift away from battery manufacturing to system integration and grid solutions, IHS Technology says in a research note.

GE’s venture capital unit is said to have invested a “double-digit million sum” although neither company disclosed terms of the deal they announced on Monday.

In 2015, Sonnen was the largest provider of residential energy storage systems in Germany and is rapidly expanding in Australia, the US and UK, where demand for behind-the-meter energy storage systems is quickly growing.

GE’s commitment is likely to help accelerate Sonnen’s commercial expansion, as it brings with it the power of the US industrial giant’s established brand and needed up-front financing, according to Marianne Boust, principal analyst at IHS Technology.

She notes that Sonnen recently launched a community energy trading platform whereby individual PV and storage owners can trade electricity, while GE’s powerful analytics and data management tools will enable Sonnen to scale up its offering.

The deal will also expand Sonnen’s customer base to industrial end-users, which are GE’s mainstream customers.

Last October, GE launched a dedicated energy services company “Current,” to offer fully integrated energy solutions combining analytics, solar, electric vehicles and energy storage. Sonnen’s experience with PV and energy storage, as well as a strong European foothold, will enhance GE’s position on the market, according to Boust.

GE in January 2015 announced that it was shutting down its sodium-nickel-chloride batter manufacturing plant.

Although Sonnen says it can work with any technology, its principal ties is primarily with lithium-ion (Li-ion) battery manufacturer Sony, thus highlighting how mainstream Li-ion battery has become.

“Customer acquisition and value creation around aggregation of behind-the-meter customers are paramount for the success of the energy storage industry,” she writes.  

IHS forecasts that the global behind-the-meter energy storage industry will generate $2.5bn  sales by 2020, representing a 33% compound annual growth rate between 2016 and 2020.