Hybrid Renewable Solutions Drive Vertical Integration

As part of integrating its offering across the energy value chain, Israel-based SolarEdge recently announced its acquisition of a 75% majority stake in the Korean battery manufacturer Kokam for $88 million. Kokam is one of the largest manufacturers and systems integrators of lithium ion batteries, with a deployment of more than 7,000 MWh of in Asia Pacific. It caters to a wide application segment including distributed energy storage solutions (DESS), EVs, marine, and aerospace for a variety of applications. The company has recently entered the uninterruptible power supply business for the data center sector. SolarEdge intends to eventually buy the rest of Kokum’s share in the open market.

However, the early response to the acquisition was not all positive. According to industry analysts, SolarEdge’s shares crashed by a massive 21.5% in September 2018, even as the company finalized its acquisition plans. However, in the long term it not only strengthened its DESS supply chain but also repositioned itself as a one-stop shop across its customer segments, and offers smart energy solutions such as EV charging systems, invertors, home energy management systems, and cloud based virtual power plant solutions.

Hybrid Renewable Energy Systems Gain Foothold in the Industry

This acquisition reinforces the exponential growth potential of hybrid renewable energy systems (HRES) in the energy value chain. An HRES with solar PV or wind power backed up by a battery electric storage system enables the synchronization of renewable energy technologies and resolves resource intermittency issues. Integrated hybrid systems offer greater flexibility to adapt to growth in energy demand due to their modularity and because they can be easily scaled-up. Energy storage is a unique resource that can function as both generation and load to provide customer and grid operator benefits. Hybrid solutions are beginning to become a viable solution for end users, and several companies are looking to capture early adopters to gain a strong foothold in the industry.

Hybrid systems could play a crucial role in unlocking business opportunity through innovative business models (e.g., electrified mini-grids, solar PV home systems, pay-as-you-go solar, etc.) across energy access market such as Asia Pacific or Sub-Saharan Africa through its applications in grid interactive demand response. Though, at present the cost of storage solutions may hinder uptake. Estimates of spiraling cost declines in DESS is rapidly creating a compelling case for HRES deployments. The US, Spain, and Germany are front-runners in self-consumption technologies while investments continue to boom.

Investment Leverages Suitability

Additionally, investments in solar plus storage hybrid systems leverage their suitability across energy access markets by supporting remote and island electrification. Solar plus storage offers an opportunity for countries with unstable power infrastructures to stop using the grid for baseload applications and move to a sustainable energy system. Guidehouse Insights’ recent report, Guidehouse Insights Leaderboard: Residential Solar PV Plus Energy Storage Providers, examines the strategy and execution of 12 leading solar PV plus energy storage providers that are active in the residential market and the opportunities this creates for distributed energy resources stakeholders.