Storage feeding frenzy claims Younicos

Genset specialist Aggreko has become the latest corporate to buy into energy storage, following its acquisition of Younicos. Pic: Aggreko.

Genset specialist Aggreko has become the latest corporate to buy into energy storage, following its acquisition of Younicos. Pic: Aggreko.

By Jason Deign

Media reporting of Aggreko’s purchase of Younicos this week highlighted increasing mainstream interest in energy storage players and markets.

The GBP£40m deal, the latest in several acquisitions across the sector, was not only covered in the energy industry press but also reported in major news outlets including the BBC, the Financial Times and the UK’s Daily Telegraph.

News reports highlighted how the purchase would allow Aggreko, a Glasgow, UK-based generator rental specialist, to serve clients seeking cheaper, greener energy.

“The Glasgow-based group said the purchase of Younicos, which is headquartered in Germany and the US, would help to strengthen its position in the global energy field and open up new markets,” said The Scotsman.

Most reports also noted that Aggreko recently spent £25.3m on a rival power company called KBT, which has 200MW of diesel and gas generation under contract to PLN, a utility in Indonesia.

Aggreko capacity contracted with PLN

“The [KBT] deal will add to the 140MW that Aggreko already has contracted with PLN,” said the BBC.

The extent of reporting contrasted with that of other recent energy storage company acquisitions, such as Wartsila’s purchase of Greensmith or Doosan’s buying up 1Energy Systems, which made little impact outside the industry.

Extensive coverage in widely-read British business media likely reflected Aggreko’s status as a member of the FTSE 250 Index of second-tier quoted companies in the UK.

Nevertheless, the Financial Times called the purchase “a sign of growing interest in the smart energy storage sector.”

Not all reporting was positive, though. Most outlets picked up on Younicos’s admission of a £15m operating loss, along with revenues of £7m, in 2016.

Far less than investors had put in

And Eric Wesoff at Greentech Media pointed out Younicos’s sale value (about $52m in USD) was far less than the $75m investors had put into the firm, not to mention the $89m invested in Xtreme Power, which Younicos bought in 2014.

“Despite the positive spin from officers of the acquirer and acquiree, it’s difficult to paint this as anything but a disappointing exit,” Wesoff said.

Markets were also downbeat on the news, with Aggreko’s share price dropping 1%, according to Markets Insider.

Nevertheless, there were clear synergies within the deal, said Younicos spokesman Philip Hiersemenzel.

“What Aggreko acquired is unrivalled storage expertise, excellent systems engineering skills and an unmatched track record of project experience,” he told Energy Storage Report 

“Developing efficient power solutions”

“Aggreko will benefit from Younicos knowhow when it comes to developing efficient power solutions that include energy storage and renewables.”

Meanwhile, “the Younicos team will benefit from Aggreko’s existing customer base, its reach and scale,” he said. “All of this will help Younicos bring greater amounts of energy storage into the market more quickly, in more places.”

He cited “renewables integration and areas that can benefit from grid-forming microgrids, such as islands and mines,” as being of key interest.

While this is all surely true, there is probably a simpler narrative behind the Aggreko-Younicos deal.

Aggreko’s business model, based largely on off-grid fossil-fuel generation, is under threat from low-cost PV and increasingly low-cost batteries. 

Buying a readymade business

It had a choice of either building in-house PV-and-battery expertise and developing its own control systems, or buying a readymade business with a proven track record in the energy storage sector, and chose the latter.

At Younicos, meanwhile, it is possible investors were getting nervy.

While the company has not been doing badly, recently notching up the largest-ever US deployment of its Y.Cube storage system, it was still some way off turning a profit.

Even the Aggreko acquisition press note indicates the deal will be “loss making in the short term.”

At the same time, though, other energy storage companies have been selling like hotcakes. 

Other recent deals

Besides the Greensmith and 1Energy sales, other recent deals include Enel’s purchase of Demand Energy, DK Energy’s bid for Groom Energy Solutions and Engie’s acquisition of Green Charge Networks.

Against this backdrop, Younicos backers including Panasonic, Grupo Ecos, First Solar, Gildemeister, Mithril and Calibrium may conceivably have started wondering if their baby would end up left on the shelf.

Indeed, with Younicos out of the game the number of potential takeover targets in energy storage is dwindling.

While the industry is still packed with start-ups, the key asset most would-be buyers seem to be looking for now is software. Younicos had it. So did Greensmith, Demand Energy, Green Charge and other acquisition targets.

But now there are only a few other players, such as Advanced Microgrid Solutions or Geli, that can claim leadership in software. So, who’s next in line for an acquisition?

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