NEC’s Big Step into the Storage Market

NEC’s purchase of A123 Energy Storage marks a giant step into the battery storage market
Published: Thu 24 Apr 2014

Japanese technology company NEC has bought A123 Energy Solutions, the non-automotive lithium-ion battery and system integration branch of A123, for US$100 million from its parent company, Wanxiang Group of China.

NEC’s leaps into energy storage market

NEC’s announcement represents a giant and deliberate step into the battery storage market.

Owning A123 Energy Solutions gives NEC a leadership position in the global market for grid-scale battery installations which is becoming a key sector for photovoltaics. A123 has deployed over 110MW of its lithium-ion storage systems around the world, making it a contender with the likes of BYD, Mitsubishi, Panasonic, Samsung, LG Chem, Johnson Controls and Saft for top slot in grid-scale lithium-ion battery chemistries.

NEC has revealed that it plans to ally its information and communications technology (ICT) expertise with its recently acquired battery capability to create NEC Energy Solutions – a storage system integration business that is expected to begin operations in June. The company will provide turnkey storage systems for utility-scale and residential, commercial and industrial applications.

Customers will include NEC’s existing telecommunication, enterprise and government customer base, as well as new ventures targeting growth markets. That includes China, where NEC and Wanxiang plan to establish a joint venture.

According to NEC Vice President Hideki Niwaya, the company is aiming for global sales of energy storage systems to utilities to grow from less than US$2 billion in 2015 to around US$6 billion by 2020.

Japan’s need for storage

NEC’s move echoes a growing trend in Japan to bring integrated, scalable battery storage products to market. This is in response to the country’s growing energy crisis post-Fukushima.

The shutdown of nuclear power stations has left the country with limited capacity. As a result, utilities and their businesses and residential customers have been placed under significant pressure to reduce their peak electricity consumption, provide their own emergency backup power and integrate renewables like wind and solar photovoltaics into everyday grid operations. [Engerati:Japan’s Energy Gridlock]

In recognition of this crisis and in order to resolve the reliable supply issue, Japan’s Ministry of Economy, Trade and Industry (METI) launched a US$100 million subsidy scheme for lithium-ion battery-based stationary storage systems.

As more consumers turn to solar and wind for self-generated power, effective storage solutions are going to play a major role in resolving Japan’s energy crisis.