GE’s investment in Sonnen shows a shared belief in online trading of energy and other digitally-enabled services as the fastest potential drivers of a profitable energy storage industry, according to a Sonnen director.
Phillip Schroeder, a managing director at the Germany-headquartered company formerly known as Sonnenbatterie, spoke to Energy-Storage.News on Monday about GE investing an undisclosed “double digit million-Euro” sum into the storage company via its GE Ventures venture capital arm.
Schroeder said Sonnen was “very excited” to welcome GE as its first US investor. Sonnen’s existing funders have been European-based and made up largely of early-stage VC and private equity companies. While Schroeder pointed out that GE remains a minority stakeholder (“there is no change of control, it’s a minority investment”), he also described the new investor as Sonnen’s first “real strategic partner”.
“There are markets in which Sonnen is not yet present and we see great synergies with GE of working together to penetrate these markets,” Schroeder said.
One example would be the chance to access GE’s distribution channels in the US, Schroeder said. In other words, while GE's interest is through its VC division, the tie-up is expected to enable Sonnen access to markets, as well as to capital.
In the US, Sonnen is targeting the commercial segment. The newly-launched GE by Current sub-division is also targeting commercial end-users with a value proposition based around helping larger businesses to manage their energy efficiency, security and costs through a suite of offerings including LED lighting, solar and storage.
Digital technologies to enable 'storage as a service'
However, SonnenCommunity, a trading platform which enables system owners – and non-system owners who pay a subscription fee – to ‘share’ their stored, surplus PV energy via the grid, was apparently also a “key aspect” of the deal. Sonnen offers members of the scheme a guarantee of lower energy costs than they would pay to a regular utility. Unlike so-called virtual power plants, SonnenCommunity does not provide grid-balancing ancillary services, nor does it depend on the marginal price of electricity.
At the time of the scheme’s launch, Schroeder and Sonnen CEO explained that the idea was in part recognition that commodification of batteries and other storage hardware is a matter of time. Instead, the company was angling itself to become more “service provider” than “hardware vendor” in the long run.
“We absolutely agree with GE on the expectation that these kinds of concepts will become much more important than the hardware technology itself. So this will be one of the key drivers to monetise storage,” Schroeder said.
According to Schroeder, GE is also pushing hard to develop digital technologies in the same way that Sonnen has with SonnenCommunity.
“These are the overall advantages that we see, besides obviously also getting the necessary financing capital to grow and keep the pace to internationalise our business into new markets,” Schroeder said.
“If storage is [currently] one thing, it is hardware. [And it becomes] a commodity at some point. But we truly believe, along with GE, that community concepts will make this more attractive for the customer but also would allow us to monetise many of the features that we have such as weather data, forecasting but also to penetrate markets faster because people don’t need to pay the entire system but purely shift or exchange their monthly electricity bill for an even lower monthly community fee that allows them to generate electricity themselves and share it with others.”
Storage 'hot spot' markets that require immediate attention - and investment
With regards to markets that at present “make sense” for Sonnen to expand further into, in addition to its homeland, where it claims to have sold around 10,000 units, the focus is currently on “hot spots where we need to grow fast”, Schroeder said.
As well as its current push into the US and in other European German-speaking markets in Austria and Switzerland, Sonnen is active in Italy. Along with those, the UK and Australia are also areas where the company would also need to push its “storage-as-a-service” offerings, investing “a lot in order to allow the community to come online in other markets than just the German-speaking markets”.
In a two-part video interview with Energy-Storage.News earlier this year, Sonnen's UK head Martin Allman explained how the concept of SonnenCommunity could work in a UK context and the steps the company could take to enable the launch of something similar in Britain.