Energy Storage: It’s About the Software

batteryRenewable initiatives rely on the ability to save the generated energy for a rainy – or windless – day. It follows that the software driving the pivotal task of managing the energy storage system is of paramount importance, says Gabe Schwartz, the Director of Marketing for Stem, which describes itself as an intelligent storage company that combines hardware and software storage platforms.

The core storage technology itself is important, of course. But the linchpin – the secret sauce – is the way in which that energy is handled once it is generated. “It is not a solar panel…where if the sun is shining you are in good shape,” Schwartz said. “It must shift use from one time to another knowing exactly when most valuable time to do that is and have the ability to act quickly when those opportunities present themselves both to the customer and the grid.”

The market for storage – and the software that drives it — is growing. In late March, Navigant Research reported on the industrial and commercial energy storage market. The report, written by Research Analyst Alex Eller, said that global power capacity revenue will grow from $68.4 million this year to $10.8 billion in 2025. Deployments, the report said, will increase from 499.4 MW to 9.1 GW during the term of the study. In other words, it will grow to be a mainstay of the energy landscape.

The study paints a picture of a young and vibrant market. The sector, it says, “is growing increasingly diverse and competitive.” Vendors are “approaching the market from different angles and forming partnerships to help companies leverage their strengths. Incumbent building energy management providers are also competing with startups in this market to offer compelling solutions for various customers.”

There are many drivers. Schwartz pointed to a Rocky Mountain Institute study from late autumn that identified 13 potential value streams from a storage system. These include backup power, energy arbitrage, more efficient use of photovoltaics and demand charge reduction. The point is that sophisticated software is needed to make these possibilities into realities. “In order to target more than one of these applications with a single battery system you must have smart software telling it what should be done at any point in time,” he said. “Without that the system isn’t nearly as valuable.”

Perhaps the single most important asset the software brings is flexibility. “It…allows them to respond to needs and prices and constraints in the grid,” he said. “Now they are an active participant in the gird to support reliability and make it more efficient. They share in the benefits. They have been looking for a long time for a way to bring down consumption when the electricity is most valuable. Now see storage technology as a way to do that.”

A third element – after the multiple use for stored energy and the ability it provides to organization to use electricity strategically – is helping the market grow: Government is more welcome to the innovation of a bidirectional grid. “In certain markets, such as Hawaii, California and the northeastern states regulators are making it easier,” Schwartz said.

This week, Stem – which marries its software with batteries from Samsung, Panasonic and Tesla — announced $15 million in funding from Mithril Capital Management. The investment brings the company’s Series C funding to $68 million. In addition to Mithril, companies in the round include RWE Supply & and Trading and Mitsui & Co. (of Germany and Japan, respectively) and previous investors. The Mithril investment, Schwartz said, is strategic. “The predictive analytics, the IoT is really what is making this industry so high potential,” Schwartz said.

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