After a few initial forays, GE has decided on a new approach to energy storage.
The electric industry giant elevated its storage business this year to a standalone unit within the GE Power division. As an "incubator" within the broader company, it will have dedicated funding to pursue storage projects around the world.
"We have the direct attention of our CEO," said Mirko Molinari, global commercial and marketing executive for energy storage at GE Power, in an interview at GTM's Solar Summit Mexico. "We're bullish on storage as part of our broader portfolio."
The move reflects an appreciation for the growing value of grid storage at a conglomerate that already dominates the market for wind and gas generators. But it's also a new tack following earlier attempts that did not work out as planned.
GE ventured into battery manufacturing in 2007 with the Durathon brand. After investing $170 million in a factory, the company concluded it could not compete at scale with the lithium-ion mega-producers. It kept the integration expertise, but abandoned the battery creation business.
More recently, GE pursued commercial storage sales through its Current subsidiary, which also included efficient lighting, solar and other energy services.
That unit, too, was hailed as a startup within the broader industrial titan, designed to move nimbly and use the company's expertise to tap emerging markets. But the melange of focus areas made it hard to own any one particular niche; GE decided to restructure Current in December 2016.
"Current was doing storage and many other things," Molinari said. Now Current is focused on energy solutions for commercial and industrial customers, while GE Power has "a very specific focus on storage and microgrids," targeted at a slightly different customer base.
In that sense, GE's move resembles the decision by AES to spin off its storage business into Fluence. The theory is that giving a storage business greater autonomy and dedicated resources within the broader corporate hierarchy will allow it to grow faster and deliver more profit.
The storage personnel from Current have now moved to the standalone storage unit, joined by microgrid experts from the Alstom acquisition. They sold 120 megawatt-hours last year, Molinari said, proving out the commercial potential and clearing the way for more resources this year. The recently announced 41-megawatt project in the U.K. speaks to the scale of the operation.
A nimble giant
It's not new to hear a large corporate entity speak of forming internal startups to capture the benefits of innovation. But the experience of Current and other such attempts suggests that this concept should be approached with a bit of caution.
That's not to say this format doesn't have a lot going for it.
GE has engineering, procurement and construction capabilities and deep knowledge of grid codes all around the world, Molinari said.
"If we want to, we can serve any single country in the world right now," he said.
The broader company also brings granular knowledge of grid controls and extensive testing of battery cells to understand performance and degradation. And its blue-chip balance sheet will make it easier to finance projects than it would be for an actual startup with just a few years of experience.
Beware of autocannibalization
Another key difference between GE's storage play and a traditional startup is that the goal here isn't to disrupt the electric industry -- after all, GE is one of the oldest and most entrenched incumbents in the sector.
The descendent of Edison's company has already felt the sting of the energy transformation. Lower demand for gas generators spurred the company to lay off 12,000 workers from its Power division in December.
GE Energy Storage does not share those aspirations.
"Gas is a very important component of the future energy matrix," Molinari said.
Instead, the company offers what it sees as a pragmatic vision: The grid has a lot of gas plants, and they will still be valuable in the near term as intermittent renewables proliferate, so why not make them run better?
Hence the hybrid gas plants that GE debuted with Southern California Edison last year. The battery handles the fast-ramp, short-term capacity (it can do 10 megawatts for about 20 minutes, compared to the gas plant's ability to produce 50 megawatts indefinitely), and the gas plant takes over for longer-term operation.
This allows the gas generator to run at more optimal settings, prolonging the life of the plant and producing 60 percent less emissions. That avoids or at least delays the stranded-asset problem by preserving investments already made in gas infrastructure. It also requires a smaller battery investment compared to a standalone battery plant.
The team is trying to sweeten the deal further by developing a capital-expense-free upgrade service, Molinari added.
Unlike some of the more radically minded storage startups, GE sees more potential in helping the current grid through the energy transition than in disrupting it outright.