It's been an interesting year for mergers and acquisitions in the distributed energy space, with some unexpected developments.
We haven't seen the same massive M&A deals of years past, such as GE’s purchase of Alstom or Honeywell’s acquisition of Elster -- although Tuesday's announcement that smart metering and utility software provider Aclara was being sold for $1.1 billion to Hubbell Inc. helped bring this year's total closer to the peaks of the past.
But when you look at the activity in 2017, a pattern emerges.
Over the past year, we’ve seen a number of major European energy companies -- and some Japanese, American and Israeli ones as well -- buy into the proposition that providing distributed energy technologies and services to their customers will be a significant part of their futures.
This pattern stands out most clearly in the big European energy giants’ shopping spree this year, starting with Enel’s purchase of Demand Energy in January and closing with Centrica’s purchase of REstore in November.
In between, we’ve seen Total, E.ON, Engie and Shell also make significant acquisitions ranging from demand response and electric-vehicle management to energy storage and the connected home.
Only a handful of these acquisitions have publicized their purchase price, including Enel’s $300 million purchase of demand response provider EnerNOC, Centrica’s $81.4 million purchase of REstore, and Ormat’s $35 million for Viridity Energy. This makes it difficult to calculate total values for the year’s M&A activity compared to multi-billion dollar deal of the past.
But the pace of M&A activity, plus the observations of industry insiders, indicates that European utilities are in a bit of a land grab for acquisitions that can help them break into competitive distributed energy opportunities outside their core businesses -- or as part of spun-out arms directly focused on the market.
Energy storage providers saw a particularly busy year in M&A, with Ormat buying Viridity Energy in February, Wartsila buying Greensmith in June, Aggreko buying Younicos in July, and Trane buying thermal energy storage player Calmac in November.
It’s also important to mention General Electric’s launch of a battery-controls package for natural-gas turbines and power plants, and the formation of Fluence, the energy storage joint venture between Siemens and AES.
The same logic pushing these acquisitions is also driving consolidation in the broader energy technology industries, from smart meters and grid sensors to operations software and data analytics. Itron’s acquisition of archrival Silver Spring Networks for $830 million, expected to be completed in early 2018, is the standout example. In this case, two U.S.-based smart grid networking players combined forces in hopes of capitalizing on smart city and IOT opportunities beyond the meter.
Smaller-scale acquisitions across the spectrum of grid edge technologies included transformer maker Ermco’s acquisition of solid-state power electronics startup GridBridge, Swiss grid giant ABB’s purchase of “mission-critical communications” provider Keymile Group, and French grid giant Schneider Electric’s purchase of automatic transfer switch maker Asco Technologies.
Here’s our month-by-month breakdown of the major acquisitions of the year.
Enel's renewables division operates 36 gigawatts of clean energy around the world, and its North America subsidiary, which will control Demand Energy, has more than 100 hydropower, wind, geothermal and solar power plants with a managed capacity of 2.8 gigawatts. That global portfolio now has become a ready customer for Demand Energy's storage and energy management software.
Israel-based geothermal power giant Ormat acquired Viridity Energy for $35 million upfront, plus more payable based on company milestones this year and in 2020. The purchase price was doubtless disappointing to investors in the startup, co-founded by Audrey ZIbelman, a long-time PJM executive, energy regulator for New York state, and now a regulator in Australia.
Viridity’s core software product was built to tap the energy flexibility in buildings, factories and other demand-side resources for financial opportunities in grid energy markets. But its primary assets are a set of battery-based energy storage systems, largely centered in the PJM region.
Schneider Electric scooped up Renewable Choice Energy to help it expand renewable energy offerings to commercial customers.
Con Edison's energy services arm acquired the assets of the Northeastern solar developer Ross Solar Group.
Japanese industrial and energy giant Mitsui & Co. acquired the remainder of SunEdison's commercial and industrial solar development business for $15 million, and renamed it ForeFront Power, with plans to expand to include energy storage and C&I energy management.
AES, a global energy company that pioneered utility-scale battery storage, made a big play for utility-scale solar. The company unveiled a plan to acquire sPower, the 10th-largest solar developer in the U.S., for $853 million in cash. The acquisition gives AES a 10,000-megawatt pipeline of utility-scale solar assets.
Engie, the energy services giant formerly known as GDF Suez, bought Dutch electric-vehicle charging management startup EV-Box for an undisclosed sum, adding to a portfolio that includes previous acquisitions OpTerra, Ecova, and the remainder of bankrupt solar company Sungevity’s European operations.
EDF Renewable Energy announced a new business unit, Distributed Electricity and Storage, building on its 2016 acquisition of groSolar to expand its efforts in North American markets. Last month, EDF won a 10-megawatt/40-megawatt-hour contract with Pacific Gas & Electric, the first big success of its strategy so far.
Marine and power plant giant Wartsila bought Greensmith for an undisclosed amount. The startup has a significant number of grid battery projects in the U.S., plus software that allows for the integration of multiple types of batteries, inverters and control systems.
Smart meter maker and grid networking provider Itron bought Comverge for $100 million, giving it a stake in the U.S. demand response market. Itron has worked with Comverge on various residential and commercial-industrial demand response projects and intends to integrate its technology into Itron’s OpenWay Riva platform by early 2018.
Enel acquired EnerNOC, the Boston-based demand response giant and energy-efficiency software provider, for $300 million in enterprise value. The move gives Enel Green Power North America a foothold in multiple projects, largely in the U.S. but with a growing business in Australia, Canada, Japan, the U.K., and other markets.
GE announced its battery and controls package that integrates with steam and gas turbines, and Southern Company announced a strategic alliance with Advanced Microgrid Solutions through PowerSecure, a microgrid company it acquired in 2016.
Global generator rental company Aggreko bought energy storage firm Younicos for $52 million, a disappointing exit for investors in the German startup with a massive portfolio of battery-based energy storage projects in Europe and North America. Younicos acquired most of its portfolio from bankrupt Xtreme Power, and has spent much of the time since replacing that company’s lead-acid batteries with lithium-ion systems.
Total, the French oil giant that’s seeking to diversify outside of fossil fuels, bought energy efficiency provider GreenFlex for an undisclosed sum. Total wants to offer its customers “integrated solutions, from optimization of energy needs and sources and finding financing solutions to energy management and emissions measurement and reduction.”
Dutch oil giant Royal Dutch Shell bought MP2 Energy, the Texas-based developer of large-scale wind, solar and gas projects, that’s also diversified into distributed energy and demand response. Shell plans to grow its annual budget for the New Energies division from $200 million today to more than $1 billion by 2020.
Itron announced its plan to acquire Silver Spring Networks in a transaction valued at $830 million. The merger, which has recently cleared its antitrust review and is expected to close in early 2018, would create a smart metering giant with more than 90 million networked endpoints, putting it in second place for global market share behind Landis+Gyr, the century-old Swiss metering company that recently spun itself out from parent company Toshiba in a $2.4 billion initial public offering.
Enel made its move into smart electric-vehicle charging, buying startup eMotorWerks for an undisclosed amount. EMotorWerks has deployed about 25,000 of its JuiceBox charging stations so far, but its primary focus is on managing those chargers as an aggregated resource for grid flexibility. So far, this includes participation in California’s Demand Response Auction Mechanism.
Shell also dove into the EV infrastructure field by acquiring NewMotion, the Dutch-based manager of more than 30,000 charging points for electric vehicles in Western Europe.
German utility E.ON acquired a stake in Cuculus, a German-based provider of software that manages smart meters across the world.
U.K. utility Centrica bought Belgian-based demand response provider REstore for €70 million ($81.4 million) in cash. REstore's software-plus-hardware approach to load management has given it a fleet of commercial and industrial customers that can reduce and shift energy usage to earn money on Europe's grid markets.
Trane, the big HVAC systems maker and subsidiary of Ingersoll Rand, announced a plan to acquire Calmac, which builds and manages the biggest ice-based energy storage systems in the United States. Calmac “stores” energy by cooling ice with cheap off-peak power, then using its coldness to reduce air conditioning electricity use during times of peak demand.
The year ended with big news from oil giant BP. The company invested $200 million in Europe's biggest solar developer, Lightsource, taking a 43 percent stake in the company. BP pulled out of solar manufacturing in 2011, but has decided to try its hand at project development.