Fluence acquires energy storage software and AI pioneer Advanced Microgrid Solutions

AMS' technology uses machine learning to factor wholesale market price forecasts into its battery bidding optimisation engine. Image: Fluence-AMS.

Energy storage technology provider and system integrator Fluence has acquired Advanced Microgrid Solutions, the California company known for its artificial intelligence (AI)-driven optimisation software platform for energy storage and flexible generation assets.

A Fluence press representative said alongside today’s announcement that pairing up AMS’ “digital intelligence” platform with the energy storage company’s sixth generation battery storage hardware could allow asset owners to halve their investment payback time from six years to three. AMS has long been a pioneer of aggregating the capabilities of energy storage systems in commercial buildings and industrial sites into pooled virtual power plants (VPPs) in numerous US territories.

“Our century-old power system is stressed. Renewable energy and energy storage are the solution. AMS has developed one of the most powerful AI-enabled software engines available in the industry," Fluence chief technology officer Brett Galura said. 

"This acquisition provides customers with data-driven insights that maximize the value and performance of generation and storage assets to make the entire grid smarter. These innovations will drive the transformation of global electric power systems to ensure a more sustainable future.”

Using AMS’ tech could mean an increase in the internal rate of return for energy storage from around 10% to as much as 25% to 30%. Customers do not have to use Fluence hardware either, as the AMS system optimisation platform can be used on storage systems from other providers. AMS’ suite of solutions includes optimised bidding software that is currently in use in California’s CAISO market and the National Electricity Market (NEM) in Australia.

Fluence said today that AMS’ know-how and technology will help the company build upon its existing digital capabilities, including market dispatch algorithms, battery degradation modelling and anomaly detection. AMS will also gain the benefit of Fluence’s global sales reach, the company said. Together, they can offer customers better economics, help provide for a more resilient grid and aid in the more rapid adoption of sustainable and renewable energy solutions, the company said. 

“Fluence's announcement that it has acquired AMS illustrates how system integrators are diversifying through a clear digital strategy and advanced software capabilities,” Julian Jansen, research manager for energy storage at IHS Markit, said.

“Investors are pouring into the energy storage space, but as projects rely on volatile merchant revenue stream, creating a digital proposition that centres around asset optimisation will help differentiate in a crowded, cost sensitive market.”

Multi-faceted reasoning behind strategic acquisition, analyst says

According to Jansen, the acquisition of AMS complements the in-house system management capabilities that Fluence already has, by adding the AMS digital platform including its use of artificial intelligence, advanced price forecasting, portfolio optimisation and automated market bidding “to optimise energy storage and flexible generation assets against different price signals across value streams,” Jansen said.

In some markets in the US, including California and Texas’ ERCOT market are now offering “highly lucrative revenue opportunities from wholesale arbitrage,” the analyst said, and the acquisition of AMS’ platform and expertise in optimising large fleets of assets in wholesale markets, “bolsters Fluence’s strategy to create a digital value proposition that can command a premium in the market”.

“Through this the company aims to avoid being pulled into fierce price competition as more vertically integrated system integrators – most commonly traditional inverter manufacturers becoming system integrators – gain market share,” Jansen said.

The acquisition will also give Fluence the benefit of AMS’ years of accumulated operational insight into storage assets both in front-of-meter and behind-the-meter and allows Fluence to diversify into flexible generation asset fleets beyond energy storage.

Fluence - which formed as a Siemens-AES Corporation JV only a few years ago - claimed a big pipeline of over 800MW / 2,300MWh  of customer orders for its sixth generation systems when they launched earlier this year. It said today that AMS currently bids with 1.7GW of assets and has another 0.7GW under contract, while Fluence itself has to date deployed or been awarded 2.4GW of energy storage projects in 22 different national or regional markets worldwide.

"Customers are building larger fleets of energy storage and flexible generation assets, while at the same time wholesale markets are becoming more complex and volatile. We have a unique opportunity to lead the clean energy revolution by using AI to optimize the dispatch of flexible assets, maximise their value and make the entire electric power system more responsive, reliable and resilient," AMS CEO Seyed Madaeni said, adding that becoming part of Fluence will allow his team to "accelerate the global expansion of our software.”

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