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Secrets of the trade: Insights into Sonnen’s PV-plus-storage energy trading platform

CEO Christoph Ostermann takes to the stage in Berlin to launch the sonnenCommunity platform and scheme. Image: Andy Colthorpe.
PV Tech Storage attended the late November launch of sonnenCommunity, a new energy trading platform launched on a limited basis in Germany based on Sonnen’s residential energy storage systems.

Sonnen, formerly known as Sonnenbatterie, is one of the leading four providers of storage systems in Germany. The company appropriately enough unveiled the service at a disused fossil fuel power station in Berlin, which has since been converted to an event space.

PV Tech Storage managed to catch up with two key members of the Sonnen team at the event, CEO Christoph Ostermann and sales director Philip Schröder – who was famously previously headhunted to join Tesla in Europe and earlier this year returned to his former employers in Germany.

Christoph Ostermann, CEO, Sonnen

We have followed Sonnenbatterie/Sonnen from a while back, including some of the trials you have done of aggregated storage systems in Germany with 100% renewable utility Lichtblick, providing frequency response to the grid from pooled small-scale storage systems in a ‘virtual power plant’. The launch of sonnenCommunity today seems a little different, but does it build on the learnings of those trials?

Absolutely. The main difference with our project with Lichtblick is that in this case we are not talking about a virtual power plant, because the purpose of a virtual power plant is to balance energy, take it out of the grid if there’s an overload or feed in if there’s a shortage. 

For regulatory reasons, in Germany we are not allowed to feed electricity back into the grid. We can only take power out of the grid and store it. So at the moment, we can only provide negative balance energy to the grid. Everything else is not allowed, it’s a regulatory thing.

What we are doing here is connecting customers virtually, and we are not supplying power to the grid, so no balance energy. But we are supplying power, or a platform where our members can feed in their own power and take it out of this platform again in real time.

Let’s assume we only have two customers – which is not the case fortunately! Perhaps one has excess solar power because he lives in a part of Germany where the sun is shining, and his storage is already charged. Another customer lives elsewhere, maybe northern Germany, where it’s currently raining. We connect those two guys virtually with each other, so one can provide to the other his excess solar power, which the other one currently needs. So we at the end of the day are able to supply a platform where members can share their electric power and become ‘200% independent’ from utilities.

How does the trading aspect actually work?

We use the grid to exchange that, therefore we pay the normal fees, for grid, for VAT, for electric power tax. Yes, of course we need the grid because otherwise we would need to install cables from one customer to the other. So the grid is simply a platform but we have a software platform enabling this kind of exchange. Of course the hardware is the Sonnenbatterie system together with smart meters, which ensures we can close the balance cycle in real-time. Otherwise it’s impossible to use this as a community.

I also wanted to ask about the rebranding of the company from Sonnenbatterie to Sonnen. Has this been done with an expectation of batteries, especially lithium-ion, to rapidly commoditise?

Yes. This is exactly where we think the future is in our business. To provide hardware is nice, to provide intelligent hardware, hardware-plus-software is even nicer, but in the long run the aim is to provide intelligent services, to empower our customers. This is also a reason why we changed name from Sonnenbatterie to Sonnen, because Sonnenbatterie is too narrow, it focuses on the hardware.

When we started and launched in the German market, nobody really knew what a storage system is. We thought Sonnenbatterie (‘Sun Battery’) is a good name because everyone would understand what it is. So in the beginning it was a perfect name, when it was something of a new technology for end-customers, to explain what this device is – it stores solar power. [But] we see our destiny in the service provision.

Battery sales are commoditising more and more, already it is a commodity. Nobody knows where the whole journey is going to. What will be the right technology for storage in five years or 10 years? Maybe not even lithium ion! We are happy this is commoditising because we can make the technology accessible for more people because it’s cheaper.

So this is good news. The hardware is a necessary vehicle which we need in order to be able to offer services, but at the end of the day what we really want is to be a service provider.

Sonnen's residential energy storage system. Based on lithium-ion batteries, driven by the company's own software and energy management platforms. Image: Sonnen.
Philipp Schröder, managing director of sales and marketing, Sonnen

How would you describe the sonnenCommunity and what is behind the technology that makes it work?

We are enabling our customers to generate and store electricity – that’s the first step. We can give you the hardware to become independent yourself.

But also we are connecting all the members of the SonnenCommunity, from all the PV panels, the excess capacity of those panels and energy devices, we are pooling in a virtual pool. We know in real-time if there is excess capacity and excess demand so we don’t have to wait for a year or half a year which is the usual billing process of a utility. We have intelligent smart meters that are connecting these devices in real-time. Real-time allows us to do that and we are cutting out the middleman, which is the utility.

We are bringing together prosumers, people who are generating and consuming energy themselves, and we are only making money on the hardware side and software side, we have no interest in trading electricity ourselves.

Another of Sonnen’s trial projects with a utility in Germany has focused on peer-to-peer (P2P) energy trading. At first when I heard of trials such as this, I thought companies participating would make their money through sales of electricity, but apparently the monetary value and the profit margins are quite low. Presumably then sonnenCommunity is a service-led offering that relies less on Sonnen raising revenues by becoming a retailer of electricity?

Not even, less, it doesn’t depend on it [the marginal price of electricity] at all!

We depend on, and the big advantage we have next to the software, is that we have storage implemented. So we have much more electricity within our virtual electricity pool. So we can have electricity available at night for our customers, which is one of the big issues you have if you have a pool without storage, so we are completely new kind of energy platform, we are connecting in a digital way, online, people who produce energy. All we are doing is enabling people to do so – we are not making money on the energy itself.

What sort of scale do you need to achieve before this becomes economical?

We don’t need to scale. The kilowatt-hour of any one of our producers has a certain price when it enters our virtual pool and that price will remain the same, so the only question is, how many residential customers can we include that don’t have PV? The pool itself would work already with a couple of thousand people. The price would not be lower with more people – we just need more to integrate people who don’t have PV production. So for example, people who live in an apartment [can] subscribe to the service without owning a system. So the bottleneck is not the scale, because it’s a digital software process. What we need is a certain size for the pool so that other people can also benefit from it.

Being able to match electricity prices, consumption and generation habits – is that based on software and other technological capabilities Sonnen has developed through its recent trial projects?

Most of all there are two trends behind it: the first is decentralisation, so that you are decentralising energy producton via solar and all of that. Number two: the internet and digitalisation, we have smart meters available that enable this. This would have been impossible 10 years ago – even five years ago it would also have been an issue.

Decentralised clean energy, affordable energy and on the other hand an amazing learning curve software-wise. This will push this business concept quite rapidly.

[The idea is also] enabled by the regulation and we are ahead of the regulation. The regulator wants to go there. In order to manage a lot of renewables, and fluctuating energy in the future you need a flexible grid, real-time balancing and you need storage. We are already the future grid as we see it.

Christoph Ostermann: "To provide hardware is nice, to provide intelligent hardware, hardware-plus-software is even nicer, but in the long run the aim is to provide intelligent services, to empower our customers." Image: Andy Colthorpe.

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