by Julian Spector
June 01, 2018

Call me old-fashioned, but watching tens of millions of dollars flow into storage companies within a week or two makes me wonder if I'm on the same beat.

Gone are the days of waiting around, checking the clock, straining to find a story to write on a few million in Series As here, a kilowatt-scale pilot project there. And that was just two years ago.

It's a different world now. This week on Storage Plus, I'll examine the latest in energy storage money movements, featuring eager oil and gas majors, a windfall for sonnen and positive vibes from Wall Street, plus some dark clouds on the electric bus front.

Unbutton your double-breasted pinstripe suit, light up a Cuban and enjoy.

Solar stocks are storage stocks, too

My recent trip to New York for GTM's energy storage and gas peakers event left me with finance on the brain, so I decided to check back in on solar stocks.

A year and a half ago, we were asking "What the hell is wrong with solar stocks?"

In 2018, they actually look pretty good. SolarEdge is up 50 percent since New Year's, Sunrun almost doubled, Enphase more than doubled. SunPower and First Solar are maintaining their value. Only Vivint showed a tepid performance, down about 10 percent since the year began.

All of these companies are evolving inexorably into storage companies, too. Storage has become a linchpin of Sunrun's strategy, serving as a value-adder for its solar product, with the possibility of future revenue from grid services. It also hedges against rate changes messing with the solar value proposition.

Enphase has a modular, AC-coupled storage product that leverages its microinverter technology. That's been less of a focus lately as the company struggled to stay alive, but look for a renewed push if cash continues to flow in and not the other way around. 

SolarEdge is getting more involved in storage in the virtual power plant context and through its $11.5 million acquisition of Gamatronic Electronic Industries Ltd., an uninterruptible power supply company.

First Solar has a team dedicated to utility-scale storage, which produced the pathbreaking solar+storage peaker for Arizona Public Service. 

SunPower recently launched commercial solar-plus-storage under its Helix brand, which has been a rare source of strength amid a tumultuous time for the company. SunPower reported a 30 percent attachment rate for storage alongside commercial solar, with a $60 million pipeline.

Vivint has been beefing up on storage, too, but its efforts hit a snag. The solar company's chosen partner, Mercedes-Benz, gave up on the U.S. storage market, leaving Vivint to play catch-up to Sunrun's aggressive push in California and elsewhere.

We have very few data points to work with here, and it's not clear that investors really get what's happening with energy storage just yet. With those caveats, I'd propose a possible correlation between a company's strategic embrace of storage and appreciation in stock value. 

Let's imagine a savvy investor who's looking at the solar space and appreciates the volatility of the standalone market and where the grid seems to be headed. Such a person would be more inclined to buy into a corporate vision that put energy storage front and center.

It could be that wholly unrelated factors are driving these stock price movements. Still, I'll be paying more attention to how publicly traded companies message their storage strategy to investors, and how much airtime it gets in quarterly earnings.

Nissan chases that lucrative desert island market

Ever since the Mercedes-Benz storage company implosion, my reflexive stance on car companies pushing into the storage industry has been steely skepticism.

But you don't need to be a jaded journalist to raise an eyebrow at Nissan's new storage venture, The Reborn Light ("Batteries which no longer serve to power cars, continue their life to provide lighting.").

The automaker wants to take used Nissan Leaf battery packs, stick them in a futuristic solar-powered lamppost and produce a self-contained, zero-emission light source.

The company's beachhead markets include "the deepest of mountains" and "a deserted island," two areas where even the most fearsome municipal lighting incumbents have failed to gain market share.

The promotional site lists three additional used battery concepts beyond the desert island lighting market: home storage, mobile smartphone charging booths (why pay $30 to own a battery pack when you could wait in line on the street to charge?) and "A park converting the bursting energy of children into electricity while they play."

Millions of people live without electricity around the world, so this Reborn Light could be of value to them.

To actually reach any customers, though, Nissan needs a business plan that understands the lighting market and the distribution channels for that industry. So far, it looks like this product development proceeded without any such research, perhaps with a team of designers stuck on a desert island of their own.

Sonnen gets that money

For a bit there, it was hard to see Sonnen's pathway to residential storage dominance, as Tesla had it beat on price and name recognition.

The German startup has kept at it, unabashedly selling at a higher price point that it says brings higher value. The company has avoided unforced errors, while Tesla struggles with delays in production and delivery, and even resorted to upping the Powerwall's famously low price.

Now sonnen is reaping the benefits of its steady labor, closing a $71 million round that brings total funds raised to about $180 million. That capital will be plenty to keep scaling efforts in the U.S., Australia and Europe.

The company also locked down a “strategic cooperation agreement” with Shell New Energies, to pursue “innovative integrated energy propositions, enhanced EV charging solutions and the provision of grid services that are based on sonnen's virtual battery pool.”

Such agreements provide more PR value than substantive information, but the direction here is interesting.

Shell, which has taken an increasingly bullish stance on distributed energy and storage in particular, sees value in the network of home batteries sonnen has built out in Germany (which is far more sophisticated than anything Tesla has done with the Powerwall).

It also shows that Shell is thinking critically about the future of vehicular propulsion and wants to develop storage-assisted charging equipment, perhaps to reduce demand charges or incorporate solar energy. Sonnen's batteries are currently too small to be much use for that higher-intensity role, but joint development funding from a supermajor can do wonders for one's product roadmap.

BP wants to charge cars, fast

Keeping with the supermajors jostling over the future of mobility theme, BP sank $20 million into Israeli startup StoreDot, which is developing a new polymer-based lithium-ion chemistry it says allows for 300-mile range and 5-minute charging.

Such technology would change the game for electric cars, allowing them to charge in roughly the time it takes to fill up a gas guzzler. No wonder why BP wants a say in where this ends up.

The golden rule of next-gen battery technologies is don't believe it until you see commercial production, and that's still a ways off. GTM Research's Ravi Manghani said he isn't expecting polymer-based chemistries to go mainstream until the 2030s.

Still, this strikes me as a very positive sign for the industry. This is the sort of company that, a few years ago, would surely have languished in the so-called "valley of death" between laboratory research and funding for commercialization.

Battery materials are notoriously difficult to make money on, what with the inherently complex science and development timelines long enough to make a VC shudder. Lately, startups have discovered a new path out of the valley: the largesse of oil and gas giants.

Dirty rollout for clean buses

The Los Angeles Times dug up a stunning (I'm avoiding the word "explosive" in this context) account of shifty business practices and mechanical malfunctions marring BYD's entry into L.A.'s bus market.

Rather than build the best buses around, BYD evidently bolstered its case in transit procurements by hiring associates of decision-makers, wooing politicians and promising lots of jobs at its Lancaster factory. When it came time to deliver, the buses flopped, resulting in an initial five-vehicle shipment getting sent back.

The news has already changed the playing field for the rest of the electric bus industry, which had previously enjoyed favorable treatment in press coverage. The technology always had a "too good to be true" feeling about it: no pollution, more comfortable, cheaper cost of ownership, built-in Wi-Fi — why wouldn't every city take that route?

The BYD story supplied a memorable rebuttal: because these electric clunkers can't get up hills. In downtown L.A.

BYD's response was what we who work with words might call "unpersuasive." President Stella Li issued a statement with lines like, "As with any groundbreaking technology, issues do arise in manufacturing and performance," adding, "We continue to grow as daily technological breakthroughs make our buses able to handle all kinds of challenging routes."

It gave the impression that the company was shamelessly peddling half-baked products under the flag of the green revolution. This is exactly the wrong course to take in the U.S., where cleantech is still fighting off accusations that it's a subsidy-sucking waste of taxpayer dollars. L.A.'s procurement process played right into that narrative.

I reported on the fallout here. The gas industry has already seized on this to argue against further efforts to electrify transit in California. 

There are several other electric bus companies that actually can get up hills, even mountains. Their reputations got dragged through the mud by one bad actor. Going forward, Proterra, New Flyer and other newcomers will have to work harder to distinguish themselves from the BYD scandal in the sales process. And BYD will have to get its affairs in order.

This revelation won't alter the core value proposition of electric versus diesel buses, but it creates an unnecessary speedbump for a highly promising industry.