Washington - Transnational engineering giant
Siemens is taking aggressive steps to expand into the alternative energy market
through a new partnership with AES, an Arlington, Virginia-based power company
that operates in 17 countries.
The two
firms said regulatory filing that they are forming a new DC-based joint venture
called Fluence, which will sell industrial-scale batteries to large businesses. Fluence
will compete against established players such as Elon Musk's Tesla, which has
built out a line of business in industrial power storage alongside its electric
cars.
"Our
ultimate aim is to accelerate adoption of the electricity network of the
future," AES chief executive Andres Gluski said, "and we think energy
storage will be a very big part of that. Gluski
declined to say exactly how much the two companies are investing at the outset,
but said the venture will be "fully funded for the next five years."
Read also: Siemens on brink of power roll-out
Ownership
of Fluence will split evenly between the two firms. If regulators sign off on
the deal, the company will be based in Washington
with an additional engineering center in Erlangen,
Germany.
The firm
will try to capitalize on a broader trend toward greater dispersion of power
management assets, as utility companies and large businesses find new ways to
store and process power. In the District, for example, Pepco Holdings is
launching a $720 million plan to build three additional substations, which
process power at the sub-local level across the city.
Within the
past few years advances in power storage technology have made power storage
more economically viable, spurring a race among companies to smooth out load
times in pursuit of lower costs.
"Fifteen
or twenty years ago, power was produced in a single power plant and distributed
to buildings," said Dan Wishnick, an executive at Siemens Energy,
"but now you're seeing a trend away from centralized power to
decentralized power."
The market
for industrial-scale power storage "is comparably small right now,"
said Dan Finn-Foley, senior analyst with GTM Research, "but prices have
dropped precipitously in the last couple of years, and the economics are
starting to make a lot more sense. That's getting people's attention."
The market
is already crowded with some of the biggest names in the electronics industry,
including Samsung, BYD, LG-Chem and Tesla.
Siemens has
a smaller foothold in the energy storage market, through an internal business
unit it has built out since 2012. The partnership with AES, which operates its
own power networks, could give it the scale it needs to compete. Together,
the firms work in more than 160 countries.
If
Fluence's entry into the market has the effect of driving down prices, it could
make it easier for alternative energy to gain broader use in far-flung places.
Costs for alternative energy can vary widely based on weather and physical
proximity to the energy source.
Gigantic
batteries are seen as an obvious solution to help smooth out that variation,
but industry analysts say the idea has only recently become technologically
viable on a large scale.
"Renewable
energy sources are just not always going to be where you want them and how you
want them," said Don Hillebrand, an energy expert with the Argonne
National Laboratory, a Chicago-based energy research centre. "Cheap
battery sources enable all of those technologies and allow them to work
together."