Analyst Insight: GE Ventures' Investment in German Energy Storage Provider Sonnen

By Marianne Boust, principal analyst, IHS Technology

GE Ventures investment in German energy storage provider Sonnen underscores how successful Sonnens business model has become. Sonnen was the largest provider of residential energy storage systems in Germany in 2015 and is now rapidly expanding to the United Kingdom, the United States and Australia, where demand for behind-the-meter energy storage systems is quickly growing.
GEs commitment is likely to help accelerate Sonnens commercial expansion, as it brings with it the power of GEs established brand and needed up-front financing. Sonnen recently launched a community energy trading platform whereby individual solar photovoltaic (PV) and storage owners can trade electricity and GEs powerful analytics and data management tools will enable Sonnen to scale up its offering. The deal will also expand Sonnens customer base to industrial end-users, which are GEs mainstream customers.
GEs announcement further confirms its strategic focus shift away from battery manufacturing to system integration and grid solutions - GE announced in January 2015 that it was shutting down its sodium-nickel-chloride battery manufacturing plant. In October 2015 GE launched a dedicated energy services company "Current," to offer fully integrated energy solutions combining analytics, solar, electric vehicles and energy storage. Sonnens experience with PV and energy storage, as well as a strong European foothold, will enhance GEs position on the market.
Although Sonnen states it can work with any technology, it is currently working primarily with lithium-ion (Li-ion) battery manufacturer Sony, thus highlighting how mainstream Li-ion battery has become.
Customer acquisition and value creation around aggregation of behind-the-meter customers are paramount for the success of the energy storage industry. This announcement follows several sizeable deals since beginning 2016 targeting behind-the-meter energy storage, such as Engies acquisition of an 80 percent stake in Green Charge Networks and Sunverges fundraising from Australian utility AGL, Siemens Venture Capital and Total Energy Ventures. IHS forecasts that the global behind-the-meter energy storage industry will generate $2.5 billion sales by 2020, representing a 33 percent compound annual growth rate between 2016 and 2020.

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