Markets muted on Fluence launch

Andrés Gluski, AES: “This is a market that’s growing very rapidly.”

Andrés Gluski, AES: “This is a market that’s growing very rapidly.”

By Jason Deign

Early trading suggests markets have taken in their stride the news that Siemens and AES are joining forces to take over the energy storage market.

This morning saw Siemens (SIE) shares wobbling at just under €121 on the Frankfurt am Main exchange after losing €1.50 yesterday, when it unveiled Fluence, the energy storage joint venture with AES.

New York Stock Exchange-listed AES Corporation (AES), meanwhile, saw shares refusing to budge over the USD$11 mark throughout trading on Tuesday.

Siemens and AES revealed their plans for the joint venture at 9am Eastern Standard Time. “We are making history today,” said Kevin Yates, president of Siemens’s energy management division, in a press conference.

“We are excited about the future of energy storage and the role that it will play in enabling a sustainable electricity grid.” 

The market leader in energy storage

Siemens was looking for Fluence to become the market leader in energy storage, he said. A video shown during the press conference said Fluence would be the first “truly” global energy storage provider.

Andrés Gluski, AES president and CEO, clarified that Fluence’s objective was to lead the market for lithium-ion battery projects, specifically. “This is a market that’s growing very rapidly,” he said.

Fluence’s global headquarters will be in the Washington DC area with additional offices in Erlangen, Germany, and “select cities worldwide,” said Siemens in a press release.

Initially the company will chase opportunities in major energy storage markets including the US, UK and Australia, but in future Fluence also sees potential in countries such as India.

“Customers face the challenge of finding a trusted technology partner with an appropriate portfolio and a profound knowledge of the power sector,” said Ralf Christian, CEO of Siemens’ energy management division, in the press note.

“Fluence will fill this major gap in the market.” 

Giving AES access to 160 markets

The joint venture, which has yet to receive regulatory approval, should give AES access to the 160 markets that Siemens operates in.

Siemens, meanwhile, will increase its exposure to the grid-scale energy storage market through AES, which has around 200MW of projects “up and running” across eight markets, according to Gluski.

Together, the companies have 463MW of battery storage installed across 48 projects in 13 countries.

The AES utility-scale Advancion storage systems, based on lithium-ion batteries, would complement the Siestorage units that Siemens offers for the commercial and industrial (C&I) segment, Gluski and Yates said.

Neither company has a residential product, however, and it was not clear from the press announcement whether Fluence would develop one. 

Each will own 50% of Fluence

The terms of the deal were not disclosed but AES and Siemens will each own 50% of Fluence, which is “expected to open its doors by the end of this calendar year,” according to its website.

Fluence sees AES and Siemens making a clear bet on lithium-ion technology, which the companies foresee as representing a $45bn market within five years.

AES has been installing lithium-ion battery plants for the last decade and in January completed installation of a 30MW plant, the largest so far in the world, for San Diego Gas & Electric at Aliso Canyon in California, USA.

Siemens, meanwhile, uses lithium-ion for its Siestorage units but has dabbled in other energy storage technologies, for example developing thermal systems and working with Eos Energy Storage on the latter’s Znyth batteries.

It is unclear whether these non-lithium-ion-based initiatives would be folded into Fluence or kept within Siemens. 

Unlikely to engage in battery manufacturing

Also, it seems unlikely Fluence will engage in battery manufacturing, which sets it apart from current lithium-ion market darling Tesla.

In fact, the significance of Fluence’s launch was somewhat overshadowed by the news last week that Tesla had won the world’s largest energy storage tender, for a 100MW, 129MWh battery plant in South Australia.

“Upon completion by December 2017, this system will be the largest lithium-ion battery storage project in the world and will provide enough power for more than 30,000 homes,” Tesla said.

The news was presumably a blow for AES, which is known to have been competing with Tesla in the tender.

And for all the bluster from AES and Siemens executives yesterday, it very much remains to be seen whether Fluence can overtake Tesla as the carmaker surges ahead in the residential, C&I and utility-scale storage markets.

Notably, and in contrast to AES and Siemens, Tesla’s stock saw a marked rise yesterday, bubbling up more than 3.5%.

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