The Energy Storage Report 2024

Now available to download, covering deployments, technology, policy and finance in the energy storage market
Premium

‘Not a trend’: First quarter decline for US energy storage market but pipeline continues to grow

LinkedIn
Twitter
Reddit
Facebook
Email

The first quarter of 2024 saw declines in US utility-scale energy storage deployments and revenues for US-based or focused system integrators, but the long-term pipeline and outlook remains healthy.

Quarterly revenues for major battery energy storage system (BESS) integrators Fluence, Stem Inc and Wärtsila all fell year-on-year, discussed by their CEOs in analyst calls.

This article requires Premium SubscriptionBasic (FREE) Subscription

Enjoy 12 months of exclusive analysis

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Annual digital subscription to the PV Tech Power journal
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

Meanwhile, US BESS deployments were flat, trade body American Clean Power (ACP) reported.

Utility-scale energy storage installations were 447MW/871MWh across the US in the first three months of the year, a 3% fall in MW power and 19% fall in MWh compared to Q1 2023’s figures, the ACP noted. It brings the US’ total grid-scale BESS capacity to 17.8GW/47.5GWh.

However, the energy storage development pipeline soared 61% from 19,621MW to 31,627MW, with an average quarterly growth of 11% since 2022.

The correlation between quarterly deployments as recorded by ACP and registered revenues by those firms is not a direct one. Revenues are paid and registered at various stages of project construction and final completion is only one of those stages.

Fluence, Stem Inc and Wärtsila all put their falling revenues down to the timing of projects and periodisation of revenues and emphasised that, as ACP’s figures show, development pipelines are still growing well.

Fluence CEO: ‘Revenue moves around the year’

Fluence CEO Julian Nebreda explained that the stages of revenue recognition include the contract order being signed, the completion of manufacturing and transfer of title of equipment to the customer, substantial completion and final completion of the project – but the bulk is from the transfer of title of equipment.

He cautioned against drawing too much meaning from a single, quiet quarter – its revenues fell 11% – in light of the relatively small number of projects companies like it are working on.

Nebreda: “When we go back and look at our history, it (revenue) moves around. So this year it is quite back-ended. Last year was very divided equally around each quarter, the year before was in the centre of our fiscal year where most of the revenue was. It moves around because it is driven by our customer projects’ time, which, in a way, is driven by what they signed with their own PPAs (power purchase agreements).”

He added it was highly confident in making up for those revenues in Q4, hence why it was reaffirming its previous full-year guidance (its financial year runs to 30 September).

CFO Ahmed Pasha also said that the company’s results included settling litigation with Siemens Energy, the energy technology company spun out into an independent company several years ago by Fluence’s own joint-majority shareholder Siemens AG. Siemens AG owns 17% of Siemens Energy shares, and together with utility and independent power producer (IPP) AES owns a majority of Fluence.

The firm has also been engaged in legal tussles with other companies for past projects, namely the Diablo and Moss Landing projects in California. Discussing the Siemens litigation, Pasha added: “Our continued execution further demonstrates that our legacy backlog issues are behind us, and we are benefiting from our higher margin backlog.”

Wärtsila: ‘It’s not a general trend’

The energy storage & optimisation (ES&O) arm of Finland-headquartered power solutions firm Wärtsila saw a much greater fall of 75%.

The company said this was largely attributable to the company applying periodisation to its accounting and revenues being recognised later in the year based on delivery and completion timelines, as Energy-Storage.news noted last week.

CEO Håkan Agnevall said: “It’s not a general trend. We do see a positive development of our agreement business also in energy. For us, one of the major metrics continues to be the customer’s renewal rate on the agreements, and they are 90 percent, so a strong testimonial that we are creating value for our customers.”

In response to an analyst’s question, Agnevall added that the periodisation doesn’t necessarily mean delays: “It’s just that we have a project basis and milestones and payments are planned in a certain way and unfortunately, they are not planned for quarterly reporting. It’s not that things are slipping and sliding, it’s just that the projects in the business have a certain cadence. It leads to sales recognition in certain times.”

In response to another, Agnevall added that the majority of its BESS order intake was in the second half of 2023, and so the battery procurement for and revenue recognition for completion of those projects would largely be seen in the second half of 2024.

“You cannot buy the batteries earlier because then you would get the batteries too early, they will deplete so they will not deliver the performance you have promised to your customers,” he added.

Stem Inc meanwhile saw a 62% drop which was related to legacy contracts signed with customers prior to July 2023, explained in our coverage of its results last week here.

Earnings call transcripts courtesy of Yahoo Finance and Wärtsila.

Read Next

May 10, 2024
Commissioning has been completed on the first commercial-scale project using Energy Vault’s gravity energy storage technology, while the firm has also secured a 400MWh BESS order for a project in Australia. However, it expects revenues this year to be 70-85% lower than 2023.
May 9, 2024
Stem Inc has reaffirmed guidance of positive adjusted EBITDA for 2024, despite starting the year with a 62% year-on-year decrease in reported revenues and a fall in bookings.
May 9, 2024
Global battery energy storage system (BESS) integrator Fluence saw an 11% revenue drop in revenues in the three months ending 31 March, 2024, while it is also launching a higher energy density product and US module production this year.
May 1, 2024
Average revenues for the Gresham House Energy Storage Fund doubled from February to April this year, fund manager Gresham House said in its full year 2023 results.
May 1, 2024
Wärtsilä’s Q1 net sales in its energy storage and optimisation (ES&O) business division fell 75% year-on-year, with revenues to be recognised as projects move toward completion later in the year.  

Most Popular

Email Newsletter