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First Solar among investors in Younicos’ US$50 million energy storage ‘land grab’

First Solar CTO Raffi Garabedian called utility-scale storage an "exciting new frontier" for PV. Image: First Solar.

Thin-film PV manufacturer and project developer First Solar is among the investors in a US$50 million funding round for grid-scale storage specialist Younicos, with the money raised set to fuel the latter’s expansion.

First Solar develops utility-scale PV plants using its own thin-film solar modules. Thus far, the only public expression of interest in the growing energy storage space by the Arizona-headquartered company has been a collaboration with heavy duty engineering and machinery provider Caterpillar on micro grids that combine a variety of power and energy sources such as diesel gensets, batteries and solar.

An unnamed strategic lead investor joined First Solar in the consortium, along with Grupo ECOS, a private equity fund targeting sustainable investments. Grupo ECOS holds interests in a number of utility-scale generation assets, including PV projects in Latin American countries including Brazil, Peru, Guatemala, Panama, Chile and Mexico. London-based investment firm Alexa Capital advised Younicos on the deal.

In a statement announcing the US$50 million investment today, Grupo ECOS investment manager Ramon Candia said his company’s Latin American portfolio offered Younicos “an attractive business opportunity” for its services.

“We see energy storage as a key market driver for renewables and an important and fast emerging asset class,” Candia said.

“Younicos is a leading and exciting investment opportunity in this sector.”

Business model based on ‘stacked’ revenue streams

Younicos develops energy storage projects as well as offering a consultancy business, and has offices in Germany and the US. In a recent presentation given at a closed-doors round table event in London for the Energy Storage division of PV Tech’s publisher Solar Media, Younicos spokesman Phil Hiersemenzel explained how the Berlin-headquartered company’s business model for grid storage works.

Echoing views from industry experts including sustainability group Rocky Mountain Institute and engineer and occasional PV Tech Storage blogger Melissa Lott, Younicos sees the “stacking” of applications for storage as the best way to maximise revenue streams. Energy storage can serve a number of functions for individual systems such as solar smoothing, but can also provide grid services such as frequency regulation. In some instances, batteries can be employed to provide a number of these services, sometimes simultaneously.

According to Hiersemenzel, energy storage projects should be developed on a case-by-case basis and where possible the stacking of these various revenue streams should be applied. While the company can work with a variety of storage technologies, Hiersemenzel said the ability of Younicos’ “intelligent battery-based” systems to combine these revenue streams not only meant a better ROI, but the software behind that intelligence also helped to convince leading manufacturers including battery provide Samsung SDI to add 20-year warranties for its hardware when supplied to the German company.

Speaking to PV Tech, Gerard Reid of investment advisor Alexa Capital said this aspect of Younicos’ business strategy was “exceptionally important” in making the company an attractive target for investment.

Younicos also claims to be fiercely committed to decarbonisation and to renewable energy – visitors to its offices in Berlin are greeted with a sign that says “You are now leaving the CO2 producing sector of the world” (see picture below). CEO James P McDougall recently wrote a guest blog for PV Tech Storage on the possibility of establishing solar as a significant portion of so-called “baseload” energy. A perception that fossil fuels and nuclear will remain the more reliable sources of baseload is often cited by opponents of renewable energy as one of its drawbacks.

First Solar chief technology officer Raffi Garabedian reinforced the view that the utility-scale storage Younicos specialised in could assist greater deployment of renewables, especially in areas where grid congestion is causing hold ups.

“Utility-scale storage is an exciting new frontier for grid flexibility and modernisation that can help to facilitate high penetration of renewables in certain circumstances,” Garabedian said.

“As the promise of storage continues to evolve, we are eager to understand how it will broaden our own power plant offerings. This is an important investment in continuing and potentially accelerating the shift of our energy landscape to renewables.”

Investment advisor explains 'land grab' deal

On the motivation behind the deal, Alexa Capital's Gerard Reid said there were two major aspects.

“When we were engaged by Younicos, we came to the conclusion there was a land-grab opportunity in storage. We decided that we would find the best partners for Younicos to help them take as much of the market in this land grab as possible.

“The second thing is, we believe the future of energy is solar and storage, because storage makes solar dispatchable. Hence we looked around the world for the biggest and best partners for Younicos. We thought we could not possibly get a better company than First Solar, they are the biggest in utility-scale [PV] and they are really technology focused.”  

Reid confirmed that Grupo ECOS was a “very good choice of partner” to gain traction in solar markets in South America and elsewhere.

“The opportunity is so big, but because of that you need the right partners to get in to these markets, to execute and to do it very quickly. As I said, it’s a land-grab opportunity."

Younicos CEO James P McDougall hailed the investment as an indicator of big things to come for energy storage. Investment in storage for utility-scale PV has moved relatively slowly globally, with the exception of policy-driven markets such as Japan, Canada and California.

“We welcome our new investors and partners. Their investment and strategic cooperation commitment is the strongest possible testament to both the enormous potential of the energy storage market and the unique leadership position Younicos maintains within it. The signing of this investment round ignites the second stage of our growth plan,” McDougall said.

Spokesman Philip Hiersemenzel said it was “simply too early to comment on specifics” of the deal and what the funding will be used for, but confirmed that “we’ll be cooperating closely with all our partners globally, while also staying technologically open”. Hiersemenzel added that along with serving the company’s existing business models and customers, Younicos is seeking new markets and wants to develop more new products.

First Solar among investors in Younicos’ US$50 million energy storage ‘land grab’

Younicos and its investment advisors Alexa Capital both see the future of energy being centred around dispatchable solar. Image: Younicos.

Tags: solar-plus-storage, dispatchable baseload, baseload, investment