Storage An Attractive Investment Proposition

California intelligent storage provider Stem has raised US$45 million in funding, which also opens the way to European markets.
Published: Fri 21 Aug 2015

With the rapid growth of energy storage in the market, the increasing numbers of new entrant storage companies are proving attractive to investors and companies looking to expand.

In the second quarter of 2015, companies in the battery/storage space received US$126 million in venture capital funding in 13 deals, significantly higher compared to US$69 million in seven deals in Q1 2015, according to Mercom Capital Group. This follows a major year in 2014, in which companies in the space received US$418 million in 32 deals, while in addition there were 18 merger and acquisition transactions totaling US$232 million.

Stem raises US$47 million

Among the top VC funded companies in Q2 2015 was California-based Stem, raising US$12 million from investors including Constellation Energy, GE, Iberdrola and Mitsui. And now in Q3 Stem has raised a further US$33 million, led by RWE Supply & Trading, the energy trading arm of Germany-based RWE Group.

“RWE provides valuable case studies on the evolving grid – and the opportunity for Stem to help reshape energy delivery and consumption,” said John Carrington, CEO of Stem, Inc. “Stem is fortunate to count the organization as a partner as we strategically expand our presence globally.”

Stem provides “intelligent energy storage” combining its energy management software platform with storage technology from various partners. [Engerati-The Value of Data and Analytics in Storage Solutions] The company is working in its home state with Sacramento Municipal Utility District (SMUD), Pacific Gas & Electric (PG&E) and the California Independent System Operator (CAISO), and has been contracted to provide 85MW of behind-the-meter storage to Southern California Edison (SCE) to act as dispatchable capacity to enhance local reliability. [Engerati-Stem Pulls Distributed Storage Systems Together as One Resource and SCE Leads Energy Storage With Record 261MW Purchase] In partnership with Kyocera Solar, Stem has launched an integrated solar PV, storage solution for commercial users.

Stem has also garnered a number of awards, most recently being named a Technology Pioneer for 2015 by the World Economic Forum.

The RWE factor

Stem’s first move outside the US was in 2013, into the Australian market in a partnership with the online energy retailer Click Energy. Now with the investments from Iberdrola and RWE, the route is open to the European markets.

RWE has a history of innovation and investment in private companies. [Engerati-Innovation Takes RWE Towards The Future Energy System] The company has several storage projects under development in Germany, including demonstrating the technical feasibility of an advanced compressed-air storage power plant, and has recently launched a power-to-gas plant in Ibbenbüren which converts surplus wind and solar power to hydrogen.

In autumn 2015 a battery storage facility will be commissioned near the city of Wettringen to demonstrate that the need for further grid extension can be obviated by the smart use of storage facilities in the distribution grid.

RWE also offers Sonnenbatterie’s battery storage solutions to commercial and residential customers for combination with solar PV.

With RWE active in all countries in western Europe as well as Turkey and Croatia, the opportunities for Stem in the region are potentially significant.