The past 18 months have witnessed several clean energy mergers and acquisitions, especially amongst energy storage and electric vehicle (EV) companies. This article highlights some notable trends amongst these acquisitions and what they mean for the clean energy industry overall.
The first trend shows the acquisition of stand-alone battery energy storage developers by other renewable energy developers.
In December 2021, Able Grid Energy, was acquired by Eolian, a company of Global Infrastructure Partners. Since 2017, Eolian and Able Grid have jointly developed more than 10 gigawatts (GW) of energy storage across U.S. markets. Beginning in 2020, Eolian and Able Grid are collaborating on the deployment of 300 megawatts (MW) in California, all owned by Eolian's subsidiary, Astral Electricity.
This past July, East Point Energy, a stand-alone front-of-the-meter (FOM) battery energy storage provider based in Virginia, was acquired by Equinor, one of the largest offshore wind developers in the country. This acquisition allows Equinor to expand its U.S. renewable energy footprint as East Point Energy continues to build out its portfolio of more than 4 GW across the U.S.
In both examples, the acquirers Equinor and Eolian incorporate the critical flexibility of battery energy storage systems into their broader renewable energy portfolios, while Able Grid and East Point Energy unlock key development capital. This kind of complementary business acquisition is one of the most commonly seen in the clean energy industry as a whole.
The second trend highlights how clean energy companies now view energy storage as a fundamental component of global decarbonization.
Generate Capital builds, owns, operates, and finances solutions for clean energy, transportation, water, waste, and digital infrastructure. The company decided to acquire large-scale battery storage developer esVolta to expand into the front-of-the-meter battery storage market, noting that battery storage is critical to accelerating the energy transition. With this acquisition, Generate Capital can further expand its reach, expertise, and role in the clean energy industry.
Lastly, energy storage technology companies are acquiring others to become vertically integrated and move up the supply chain.
In July, Sensata Technologies, an industrial technology company that develops sensors, battery chargers, and other power management products, announced the acquisition of Dynapower, a provider of energy storage solutions from private equity firm Pfingsten Partners, for $580 million. With this acquisition, Sensata will be able to expand upon its product offerings and establish a stronger footing in the energy storage market.
In the electric vehicle sector, a recent example demonstrates how combining production forces is a tactic for mitigating supply chain disruptions in the industry.
Heavy-duty EV manufacturer Nikola is acquiring Romeo Power, an energy technology company that designs and manufacturers lithium-ion battery modules and packs for commercial electric vehicles. They reached an agreement for Nikola to acquire Romeo Power for $144 million in August. The acquisition will improve operations, reduce costs in battery pack production at Nikola, and guarantee a reliable equipment source in a sector threatened by supply chain shortages.
EV companies are also acquiring companies in order to offer turnkey solutions.
In August, Coil Electric, an electrical installer of EV charging, was acquired by Wallbox, a provider of electric vehicle (EV) charging and energy management solutions. This acquisition allows Wallbox to further enhance service offerings to residential and commercial customers while also expanding into the rapidly growing DC fast-charger market. The acquisition will also allow Wallbox to offer partners such as auto OEMs, utilities, and dealerships a one-stop shop for EV installation and maintenance services.
Mergers and acquisitions saw significant deals with the stand-alone storage industry as clean energy developers look to capitalize on grid stability, renewables intermittency, and additional revenue streams. Continued investment across the energy storage value chain is expected due to the sector's growth prospects and decreases in levelized costs, particularly in battery energy storage. The stand-alone energy storage tax credit through the Inflation Reduction Act will also be a game changer for the industry and federal investment in long-duration energy storage will provide additional reason for the sector's interest.
In the near future, the EV charging sector may undergo even more consolidation as companies look to expand their geographic footprint and value. In addition, new EV business models should be expected across infrastructure firms, charging equipment manufacturers, public charging installers, charging station operators, site owners, and charging software companies, all of whom stand to gain from the sector's impending explosive growth.
Supply chain disruption has impacted the entire renewable energy sector, which relies heavily on imported raw-materials and components. Company acquisitions to mitigate these supply chain impacts will undoubtedly increase, even as the U.S. looks to develop its own clean energy manufacturing capability. Acquisition also allows renewable energy companies to reshape business models and develop an integrated value chain. The rest of 2022 will likely see additional clean energy mergers and acquisitions . Stay tuned for more updates.