This week, Wärtsilä announced the acquisition of Greensmith Energy, the US-based system integrator and software company which specialises in developing grid-scale energy storage solutions. This move marks the latest milestone for Wärtsilä as they continue to diversify into hybrid power solutions (and microgrids), including the integration of solar PV and energy storage alongside their traditional engine-based power generation offerings. The acquisition is expected to be completed in July 2017.
In April last year, Wärtsilä announced that it would enter the solar energy business by offering utility-scale solar photovoltaic (PV) solutions. The new solutions included solar PV power plants of 10 MWe and above, and hybrid power plants comprising solar PV installations and internal combustion engines. Both solutions are offered with full engineering, procurement and construction (EPC) capability. Wärtsilä has previously set a target of delivering 200 MWe of solar installations by 2018. It’s not clear whether this target will be revised following the acquisition. What is clear, however, is that Wärtsilä is serious about hybrids and moving outside their comfort zone of manufacturing and selling engines.
But Wärtsilä isn’t the only engine company moving into the hybrids/microgrids space. Since 2015, Caterpillar Inc. has been partnering with First Solar and Fluidic Energy to offer microgrid solutions that incorporate solar PV, energy storage and back-up power generation using CAT gensets. And General Electric (GE) has been quietly building up expertise in the microgrids space by leveraging a wealth of internal resources (including generation and energy storage assets, software and analytics capabilities, and low and medium voltage electrical equipment) and deploying these solutions across a number of test-bed sites – primarily in North America.
What’s driving this trend towards hybrids?
Delta-ee has been monitoring the trend of companies moving into the hybrids (and microgrids) space for many years as part of our ongoing Distributed Power Service. So, what is stimulating this trend? Here we list some of the main drivers:
- Falling costs: Distributed Energy Resources (DERs) such as solar PV and energy storage systems are increasingly cost-effective alternatives to conventional power solutions – especially in remote regions reliant on diesel for power generation.
- Energy resiliency: Microgrids are increasingly being developed to mitigate the risk of grid blackouts – especially in parts of North America which have been hard hit by extreme weather events in the last 5 years.
- Customers looking for energy solutions – not pieces of kit: Particularly in the C&I space, customers are increasingly requesting ‘energy service solutions’. Therefore, companies that can offer a suite of options, tailored to the customer, are well placed to increase market share.
- Renewables and back-up power generation are natural bedfellows: With the rise of on-site renewables (especially solar PV), there will be increasing opportunities to develop microgrid solutions which utilise existing assets to create additional value for the end-user.
There is now little doubt that hybrid power solutions and microgrids will play an increasingly important role in the energy systems of the future. The questions are:
1) Where are the opportunities?
2) What is the size of the prize?
3) And who is best placed to benefit?
Wärtsilä is certainly trying to help answer question number three.
On Thursday 25th May, 3pm UK time, we shall be hosting our next webinar on the subject of Microgrids. During the session, we shall be discussing the Greensmith Energy acquisition in more detail, and sharing some highlights which help answer the three questions above. Register now.
Delta-ee has just published our latest multi-client study: Microgrids: A rapidly growing global market – where are the opportunities?
To find out more / enquire about purchasing the Microgrids Study, please send an email to firstname.lastname@example.org.