Last week, Fortune 500 energy company AES added a new startup to the growing stable of clean energy companies it’s supporting.
5B, an Australian company producing prefabricated solar arrays that stretch out like an accordion when installed on-site, ended its Series A with a “strategic investment” from AES and plans for global expansion.
Overall, the investment round was nothing eye-popping — about $8.6 million, which 5B tells Greentech Media it will use for business needs including international manufacturing and continued technology refinement. But AES also took a 25 percent stake in the company, banking on a new partnership and a solar innovation that AES CEO Andrés Gluski told GTM “could become massive” as it's deployed at scale.
The partnership with 5B will look somewhat similar to AES’ involvement in Fluence, a storage joint venture with Siemens, where the company can sell to AES competitors but AES will have an early-mover advantage on the technology.
5B says its solar arrays, built offsite and then transported for quick construction, are three times faster to install than a traditional single-axis tracking system. Because the system doesn’t use aisles and crams panels into spaces 25 to 50 percent smaller than those more traditional systems, the company also claims its product — called Maverick — produces 40 to 45 percent more power per square foot.
Those claims are significant, even if the product is still in its early stages. 5B has just under 30 megawatts in operation or construction across 47 sites. But the startup has also already inked another high-profile deal as the supplier for Australia’s 10-gigawatt Sun Cable project, which will export power to Singapore via an underwater transmission line. With construction slated to start on that project in 2023, 5B has three years to scale from tens of megawatts to tens of gigawatts.
A maverick solution?
Solar projects are usually designed for specific sites, depending on land area, topography and irradiance. 5B’s Maverick, on the other hand, is akin to arriving at a solar site and rolling out a picnic blanket of solar panels.
Maverick systems have only been installed in Australia thus far, meaning the product is optimized for geographies that are similarly flat, dry and sunny. The system is also low to the ground as compared to fixed-tilt and axis-tracker utility-scale systems, which means that large amounts of vegetation can interfere with its proper functioning.
Because of those quirks, AES estimates Maverick can work for about half of its currently planned pipeline, approximately 5 gigawatts' worth of projects. That’s a “reasonably conservative estimate” says Gluski, as the company continues to iterate on Maverick's design and test in more locations.
“The thesis of the investment is it can cover a very large percentage of the pipeline,” said Chris Shelton, AES’ chief technology innovation officer.
Working with AES will help 5B move into new geographies more quickly, says CEO Chris McGrath. The two have a time-limited exclusive partnership in AES’ “key markets."
5B's folded PV setup orients panels to both the east and the west, which saves significant space, and the lack of steel piling lifting panels off the ground reduces balance-of-systems costs. 5B says its value proposition is strongest in markets with high labor costs such as the U.S. and Japan because the installation process is faster than traditional systems.
AES expects the product to be a good fit for areas such as the Western U.S.; the company this year will build its first projects using Maverick in Panama and Chile.
AES is betting that as solar panel costs continue to decline, installers will focus on bringing down the price tag on other parts of building a system. AES also expects competition for land to grow as countries increasingly rely on solar to reduce emissions and combat climate change.
“Demand is just going to continue to grow and ultimately there’s going to be a limited number of places you can put the solar over time. That we think is limited in part by access to transmission and distribution infrastructure on a regional basis,” said AES’ Shelton. “Land is not constrained on an absolute basis … it’s constrained around where people want to consume it.”
From that perspective, maximizing power produced per square foot is enticing. As 5B scales production and refines material and production choices, it also anticipates 30 to 40 percent cost reductions over the next three years — making it competitive on a levelized cost of energy (LCOE) basis in more and more contexts, the company said.
Still, industry analysts are somewhat skeptical that the Maverick product will be able to beat out proven technologies such as solar trackers.
"This kind of innovation is important to help simplify the installation of larger-scale projects," said Molly Cox, a solar analyst at Wood Mackenzie, adding, “I'm not sure if there is much of an LCOE improvement compared to a tracker system," Cox said. That will likely become clearer as more Maverick systems are deployed.
AES' own energy transition
The partnership with 5B is part of a pattern for AES, which in recent years has invested in several clean energy companies including a joint venture in storage provider Fluence and funding for Uplight, the joining of Tendril and Simple Energy.
In recent months, AES sold off 2 gigawatts of its coal assets and inked 1.5 gigawatts' worth of renewables deals. Overall, AES plans to cut its carbon-intensity by 70 percent by 2030, with coal's share of its generation set to fall from 34 percent today to less than 10 percent within a decade.
Like many large energy companies, AES, whose business is divided between power generation, storage and utilities, has reorganized to emphasize cleaner resources (while hanging on to fossil assets until the company thinks it makes economic sense to ditch them). On the company’s August 6 earnings call, Gluski said AES “aim[s] to be the most competitive solar developer by using 5B.”
Investing in new technologies and innovative solutions will help speed the transition, argued AES’ Shelton. “We need to challenge some of the status quo of how we build solar facilities.”