Originally posted on investors.com by Donna Howell of Investors Business Daily, March 26th 2015. Click here for the original article.

 

Just days after SolarCity (NASDAQ:SCTY) and cousin company Tesla Motors (NASDAQ:TSLA) said they've teamed up to build entire tiny power grids using electric carmaker Tesla's batteries, heavyweight Samsung SDI strode in with a strategic alliance along similar lines, with global automation technology firm ABB. And both announcements followed a key grid-related acquisition by solar power company SunEdison (NYSE:SUNE).

The world's top supplier of lithium-ion batteries, Samsung SDI on Wednesday announced a strategic alliance with power and automation technology provider ABB (NYSE:ABB) to develop and market microgrid systems for energy storage solutions.

Samsung and SolarCity (with Tesla) already provide lithium-ion battery packs to homes and businesses. These can accumulate power made by, say, a rooftop solar energy system — to be used when the sun isn't out. Some are compact and wall-mountable. Samsung also markets its packs as an uninterruptible power supply for data centers.

Link up a bunch of these power packs with some sophisticated controls and you get a microgrid. Along with potential uses for businesses and housing developments, such at-the-ready power is seen as a key way utilities could smooth out the spiky timing of renewable energy fed into the regular grid by solar, wind and other systems.

Samsung, ABB Alliance

ABB has what Samsung calls a global presence and knowledge in microgrid technology, allowing Samsung better access to microgrid systems and markets, and says Samsung's expertise in the battery field will benefit ABB partly by helping it get into energy storage systems.

"The alliance with ABB provides Samsung the basis to expand our global No. 1 position into the microgrid market," Namseong Cho, CEO of Samsung SDI, said in the announcement. "Together with ABB, we will make our utmost effort to develop new products and to pioneer new markets to keep on being the world's best ESS company."

Tesla is building what is expected to be the world's largest lithium-ion battery factory, the multibillion-dollar gigafactory, in Nevada. For now, it needs batteries for its electric vehicles. To that end, it is a partner to Panasonic and is also believed to be sourcing from Samsung.

Solar power company and power plant developer SunEdison got some bullish analyst comments after the March 5 announcement that it acquired the energy storage project origination team, project pipeline and (pending agreements) four operating storage projects from Solar Grid Storage, so that it "now offers battery storage solutions to complement solar and wind projects worldwide."

Bloomberg also reported Wednesday that SunEdison is buying 1,000 batteries from Imergy Power Systems in order to build microgrids to power rural villages in India, and that it aims to develop 5,000 such systems by 2020.

SolarCity's microgrid work is "not a needle-mover" on sales yet vs. SunEdison's India project, Robert W. Baird analyst Ben Kallo told IBD. Both will get experience they'll need once microgrids pass the early stages of adoption, he said.

Utilities are interested in microgrids as the next extension of their smart-grid tech efforts, a recent Navigant Research paper said of so-called utility distribution microgrids. The UDM market will total more than $46 billion in implementation revenue from last year through 2023, it projects.

"UDMs are a networking platform that utilities can both aggregate and optimize," Navigant analyst Peter Asmus wrote. "For example, similar to advanced metering infrastructure, key microgrid components can be easily integrated into existing smart grid deployments and help send the right price signals so that customers become part of the solution with proactive responses, rather than remaining passive reactive components with little awareness of their impact on the power grid."

The UDMs are a small part of the microgrid market but are gaining traction, Asmus says. He says U.S. government programs that have arisen due to big power outages from extreme weather set a stage for regulatory reforms that could enable both customer-owned microgrids and the utility type.

The Asmus report cites "potential for significant investment opportunities for both the regulated and unregulated business units of utilities."