March 5, 2015 / 2:53 AM / in 3 years

Exclusive: SunEdison purchases U.S. energy storage firm in fast-growing market

(Reuters) - U.S. solar project developer SunEdison Inc SUNE.N is expanding into the fast-growing market for grid energy storage with the acquisition of a startup that pairs big batteries with solar installations.

SunEdison said its purchase of Solar Grid Storage LLC, to be announced on Thursday, will allow it to begin building a storage plan across the country, Tom Leyden, SunEdison’s vice president of energy storage deployment, told Reuters on Wednesday.

“My mandate now at SunEdison is storage deployment, and that means nationwide,” said Leyden, who was previously chief executive of Solar Grid Storage.

Missouri-based SunEdison, which had 2014 sales of $2.5 billion, did not disclose terms of the deal closed in January.

The deal with Solar Grid Storage is the first pairing of a solar generator with a storage firm since California Governor Jerry Brown called in January for an increase in the state’s renewable energy goal to 50 percent by 2030 from 30 percent by 2020.

The transaction, which complements SunEdison’s recent $2.4 billion deal to buy wind energy company First Wind, will also put SunEdison’s financial heft into a nascent industry that is critical to supporting increasing amounts of wind and solar energy on the nation’s power grids, Leyden said.

Storage systems such as batteries can absorb excess solar and wind power when there is more electricity than demand, and can likewise deploy power to the grid when the sun is not shining or the wind is not blowing.

Though valued at just $200 million in 2012, the energy storage industry is expected to grow to $19 billion by 2017 due to government mandates for renewable energy, according to research firm IHS CERA.

To date, Solar Grid Storage has completed four projects on the U.S. East Coast. Those projects combine batteries with solar arrays at places such as Philadelphia Navy Yard and commercial properties in New Jersey and Maryland. Grid operator PJM then pays to use the batteries to balance supply and demand on its system second-by-second. The commercial properties can also use the batteries as backup power in the event of an outage.

SunEdison plans to expand such projects both within PJM’s 13-state territory and beyond.

Solar Grid Storage relied in part on funding from Connecticut-based Clean Feet Investors I LLC to get those projects off the ground. Clean Feet is managed by renewable energy entrepreneur Bernard Zahren and SunEdison co-founder Jigar Shah.

PJM’s territory has been a key market for storage thus far, but California is also making a big push for storage, long seen as a developing technology that could allow for broader use of solar and wind power.

The Golden State has required that utilities procure 1.3 gigawatts of storage by 2020, and a handful of companies at the end of last year secured lucrative storage-related contracts with utility Southern California Edison (EIX.N). The state’s other major investor-owned utilities have yet to announce their storage plans.

Reporting by Nichola Groom in Los Angeles; Editing by Terry Wade and Ken Wills

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