Stem Inc is set to be publicly-listed and expand its global reach through a deal worth as much as US$608 million, agreed with special purpose acquisition company Star Peak Energy Transition Corp.
The US-headquartered provider of battery energy storage systems driven by artificial intelligence (AI) which optimises their ability to capture market opportunities said this morning that a definitive agreement for a business combination has been reached with Star Peak.
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Star Peak is already publicly traded and the combined business will list on the New York Stock Exchange under the ticker ‘STEM’ once the transaction is closed. Stem Inc CEO John Carrington will lead it.
Stem Inc has largely played in the commercial and industrial (C&I) segment of the energy storage market, creating connected virtual power plants (VPPs) through batteries at office buildings and industrial sites, although it has also diversified into areas including utility solar-plus-storage.
From using stored renewable energy to reduce peak demand and lower energy costs for C&I customers and using their systems to provide grid services, Stem Inc has been one of the primary movers in the energy storage-as-a-service market. More recently the company has been working on projects with stakeholders including utilities, developers, EPCs, independent power producers (IPPs) as well as businesses, commissioning more than 600MWh of storage capacity since 2014. Earlier this year, the company won out in a Request for Proposal (RfP) to manage 345MWh of energy storage in California utility SCE’s service area.
The company’s intelligence energy services software platform, called Athena, has already been deployed and “proven” in Canada and Japan as well as in Stem’s US homeland, CEO Carrington said in a press release. Athena runs or operates around 1GWh of storage across more than 900 systems. According to Carrington, the merger and funds the transaction gives the company access to will be used to “enable expansion into several additional global markets”.
“This transaction is transformative for us and we expect it to significantly accelerate our growth.
“Our systems deliver value to our customers by lowering energy costs, enhancing renewable returns, and meeting ESG and sustainability goals, while increasing grid reliability,” Carrington said, adding that the combined company’s balance sheet will “empower Stem to expand its technological leadership and geographic reach”.
The combined company has been valued at a US$1.35 billion pro forma equity value, while the transaction is expected to provide US$608 million in gross proceeds to the company. Existing and new investors include investment management companies BlackRock, Electron Capital Partners and Van Eck Associates Corporation, asset management firm Adage Capital Management and investment advisor Senator Investment Group.
Stem Inc and Star Peak Boards of Directors have unanimously approved the deal, which remains subject to approval from stockholders and other closing conditions including regulatory approvals. The deal is expected to close in Q1 2021, Stem Inc said.
The recognition of the value of software in the energy storage market was discussed at the recent Solar and Storage Finance USA event hosted by our publisher Solar Media. The acquisition of Advanced Microgrid Solutions (AMS), another energy storage company largely focused on software, by technology provider Fluence, took place earlier this year. AMS sold off its C&I and behind-the-meter VPP business to Stem Inc shortly before that acquisition.