Here’s a look at recent news from some of Washington state’s grid modernization and energy storage players, including Itron’s planned acquisition of Silver Spring Networks; a big energy storage project in the Mojave Desert for Seattle-based Doosan GridTech; and a bolus of federal funding for electricity grid researchers at Pacific Northwest National Laboratory:
Itron Buying Smart Grid Rival Silver Spring
The energy sector M&A activity in Washington state continues, this time with a major player in utility infrastructure acquiring a top rival in grid modernization technology. Itron, a leading provider of metering and analysis technology and services for water, gas, and electric utilities, announced plans to acquire Silver Spring Networks for $830 million.
Itron (NASDAQ: [[ticker:ITRI]]), based near Spokane, WA, is already a pillar of the state’s significant and growing grid modernization industry. The capabilities it would gain through this acquisition only strengthen that position, as researchers, technology providers, and utilities work to update the electricity grid and other critical infrastructure. This work involves making them more flexible, resilient, and controllable to respond to a host of challenges, including the integration of greater volumes of renewable energy and electric vehicles.
Itron says its cash offer of $16.25 a share is a 25 percent premium for Silver Spring (NYSE: [[ticker:SSNI]]). The San Jose, CA-based company provides of a suite of technologies and services that allow utilities, cities, and industrial companies to instrument and monitor their equipment—everything from customers’ meters to street lights to demand management controls and renewable energy resources. Silver Spring brands the communications network underpinning its “smart” infrastructure as SilverLink, and says more than 26.7 million devices are connected to it globally. The two companies say that once combined, they’d have upwards of 90 million “smart endpoints” worldwide.
The electricity grid has been called the largest machine ever built. These are two of the companies that make some of the pieces being used to rebuild it to accommodate an array of changes in power supply and demand. Itron and Silver Spring have both recently been focusing more on providing the software and services that sit atop the connected equipment, enabling improved efficiency and reliability.
Itron intends to take on $750 million in new debt from Wells Fargo (NYSE: [[ticker:WFC]]), along with cash on hand, to finance the acquisition, which is subject to regulatory and shareholder approval. Itron says the acquisition could close late this year or early in 2018. The $830 million price tag is net of $116 million in cash on Silver Spring’s balance sheet.
“The addition of Silver Spring brings more capabilities to our offerings and advances our strategy of delivering highly secure, value-generating solutions for the critical infrastructure within utilities, smart cities and the broader industrial IoT sector,” Itron CEO Philip Mezey says in a Monday news release announcing the deal.
(Here’s an Xconomy interview with Mezey from 2013, shortly after he took the top Itron job, discussing the enormous market opportunity in digitizing and automating the meters that measure utility customers’ water, gas, and electricity usage. A lot has happened in the intervening years, but the acquisition is in line with the trends discussed at the time.)
The Itron-Silver Spring deal comes amid a wave of acquisitions involving Washington state companies in this sector over the last two years. These include:
- Canadian utility giant Hydro One’s planned acquisition of Spokane-based Avista Utilities (NYSE: [[ticker:AVA]]).
- Enel, an Italian utility, acquired Demand Energy Networks through a subsidiary.
- German materials giant BASF acquired energy storage materials company EnerG2.
- Customized Energy Solutions bought demand-management services provider Powerit Solutions.
- Doosan Heavy Industries, a South Korean conglomerate, acquired energy storage software maker 1Energy Systems.
Doosan GridTech Tapped for Large Storage Project
The entity that resulted from that last acquisition, Doosan GridTech, recently received the green light to build a large energy storage project in California. The approval marked a new chapter for the erstwhile startup.
The new division can take on entire storage projects, rather than just providing software that integrates them with the electricity grid, as 1Energy had since its founding in 2011.
Doosan GridTech will build a 20 megawatt energy storage system for the Los Angeles Department of Water and Power (LADWP), among the largest municipal utilities in the U.S., adjacent to its enormous Beacon Solar Plant (pictured at top) in the Mojave Desert.
Energy storage systems connected to the electrical grid can serve many purposes and Doosan says this project—consisting of 13 strings of lithium-ion batteries, as well as transformers, controls, HVAC, and safety systems—will help the utility integrate the solar energy production with its operations. Electricity generated by the solar panels can be stored and delivered back to the grid late in the day when demand increases. Batteries can also help regulate power flows on the grid, and quickly ramp up to respond to increases in demand.
Those services—which involve different rates of charging and discharging batteries, in coordination with what’s happening on the larger utility grid—are orchestrated by the Doosan-developed controller software. These digital tools adhere to a standard defined by the Modular Energy Storage Architecture Alliance, of which 1Energy was a founding member, and enables LADWP to add up to another 30 megawatts of energy storage at the same location.
There is another more acute impetus for this project and several others that were brought online quickly this year (including one installed for Southern California Edison by Tualatin, OR-based Powin Energy): The Aliso Canyon gas leak.
The Aliso Canyon natural gas storage field, northwest of Los Angeles, is the largest in the SoCalGas system. It’s a key supplier for 17 natural gas-fired power plants that provide electricity to Southern California, ensuring that they’re capable of quickly ramping up generation during hot afternoons when everyone turns on their air conditioners. In October 2015, a massive methane leak—among the worst in U.S. history—was discovered at the gas field. As a result of the leak, more than 100,000 tons of the potent greenhouse gas were released, sickening people in surrounding communities and closing the field. Amid ongoing legal battles, regulators cleared Aliso Canyon to reopen only in July, but at 28 percent of its usual capacity.
The Aliso Canyon disaster created an opportunity for the energy storage industry. California utilities regulators—who had already set policies making the state the top U.S. market for storage systems—fast-tracked several energy storage projects to help ease the shortage of electricity resulting from the Aliso Canyon leak.
At the time of the acquisition, 1Energy’s software was helping utilities manage storage projects with a combined power capacity of about 30 megawatts. The LADWP project by itself represents two-thirds of that, and it’s just one of six large projects Doosan expects to have delivered through a three-year period, when it’s completed in the third quarter of 2018.
The company has grown from about 20 employees to more than 60, and more hiring is planned, says Rogers Weed, vice president of product management, via e-mail.
PNNL Leads Grid Resiliency, Cybersecurity Projects
The U.S. Department of Energy is channeling up to $50 million to its national laboratories, including Pacific Northwest National Laboratory, targeted at energy infrastructure resiliency.
Specifically, PNNL, based in Richland, WA, will lead two projects focused on renewable energy resources connected to electricity distribution systems—the local networks delivering energy to homes and businesses—such as solar panels mounted on rooftops.
One project, in partnership with Duke Energy (NYSE: [[ticker:DUK]]), will look at how small solar installations can be used to locate and isolate faults on the grid and restore service.
A second project will evaluate the technologies, operations strategies, and economic value of this and other distribution system resiliency projects.
Another set of nine PNNL-led or supported projects focuses on a range of cybersecurity issues, from blockchain for distributed energy resources to vulnerability scanning technology adapted for older equipment.
