As the storage sector continues to develop, the utility-scale battery joint venture created by tech giants Siemens and AES Corporation is aiming to increase its market share in the commercial and industrial space.
Growing quickly in the nine months since its launch, Fluence expanded to new headquarters on Tuesday in Arlington, Va.
The company is largely known for utility-scale storage projects and replacing peaker plants with batteries in California, but now its leaders are eyeing more opportunities with renewable integration and storage applications for transmission. Its rapid rise, backed by the capital and experience of its parent companies, also enables its leadership to focus on large-scale behind-the-meter (BTM) opportunities.
"I believe transmission is going to be one of the next big things," Stephen Coughlin, Fluence's CEO, told Utility Dive. "You can move power around in times of less congestion, store it and then it's already where it needs to be, and then release it."
Battery storage: The grid's Swiss Army knife?
By virtue of being able to capture energy and to feed it back into the grid, battery storage can play a lot of roles. However, as more uses are explored, U.S. regulations have yet to catch up.
"The problem with storage is that it does things that the current regulation doesn't remunerate," Andrés Gluski, AES president and CEO, told Utility Dive.
Gluski credits states for putting out legislation that provides the right incentives for storage, noting that it varies state by state.
Arizona, Colorado and Nevada are working on energy storage policies and the proposed targets to help develop the industry.
One issue is that storage largely lacks tax incentives when placed apart from renewables. Rules that would put storage on equal footing with renewable assets would make the top of the regulatory wishlist for Fluence's chief operating officer, John Zahurancik.
"There are places that you could use energy storage that are in the center of the grid," not necessarily paired with renewables, Zahurancik told Utility Dive.
And beyond its siting, Gluski pointed out that there are multiple potential capabilities where storage lacks regulations.
"Something as simple as a mandate to consider energy storage and the procurements is very helpful," Coughlin said.
Coughlin also referred to transmission as an important application of storage.
"There's a huge role for energy storage in transmission," Gluski said, "basically allowing you to run the transmission lines closer to their nameplate capacity, rather than having to build out just for peak which may last an hour."
In Virginia, home to AES and to Fluence's headquarters, the state is currently working on a goal to cut carbon emissions in the power sector 30% by 2030. The goal, established by former Democratic Gov. Terry McAuliffe, includes an initiative in the state's voluntary renewable portfolio standard program to use 15% renewable energy in Virginia's energy mix by 2025.
Current Democratic Gov. Ralph Northam sees a role for storage in the state's clean energy goals as technology is improving to help store intermittent renewable energy.
"I'll work with our agencies and I'll work with our private sector to do everything that we can to move that forward," Northam told Utility Dive.
Northam, who participated in the ribbon-cutting for Fluence's new headquarters, did not clarify the specific role energy storage would serve in the 2018 Virginia Energy Plan.
Fluence hit the ground running by combining AES and Siemens' storage businesses. That's how, less than a year in, it is working on the largest of five batteries for San Diego Gas & Electric, at 40 MW / 160 MWh.
"We're just having projects signed very quickly," Coughlin said.
The energy storage market may be nascent compared to other technology, but Fluence sees a solid path to maturity by its concise focus, cemented by the international reputations of its parent companies.
"I think over time you're going to see the real credible players kind of rise to the top," Coughlin said, "and those that really don't have the track record and have difficulty honoring the performance [contracts] that they sign up to, that will become clear over the next several years."
The Fluence CEO estimates the joint venture makes up 10% to 12% of today's utility-scale, commercial and industrial energy storage market share. He wants to see that rise to 25% in the next five years.
While Fluence has been making a name for itself on the utility and power developer scale, the team is beginning to focus "on the commercial-industrial side, behind the meter," Zahurancik said.
Fluence also expects to grow its renewable integration through its SunFlex system. The offering is unique to the joint venture, which also offers Siestorage and Advancion energy storage systems, previously offered by Siemens and AES respectively.
Siestorage, smaller and shorter duration systems, provide black start capabilities and lightning-fast response for critical loads, while the Advancion systems are larger and longer duration, mostly for utility-scale applications.
SunFlex is designed to share the power conversion equipment between the battery and the solar PV, meant to "smooth the ramping" when dealing with renewable intermittency and "time-shift solar energy," according to Coughlin.
"It's a more efficient and cheaper design than if you build these sorts of storage and solar separately," he said.
While moving into the C&I space, Fluence officials say the company is not joining the fray of residential energy storage developers and installers.
The business may be tempting given the recent incentives state-level incentives established this year for residential storage and solar-plus-storage installations. For example, California's Energy Commission's 2019 Building Energy Code includes an energy storage incentive as part of its rooftop solar requirement for new residences starting in 2020. And small-scale storage developers are not the only ones trying to profit from growing customer interest. Green Mountain Power offers a residential battery storage program where the systems are owned by the utility.
But Fluence is not taking the bait at the risk of overextending itself from its specialty.
"It's a different operating model and we're not set up to take advantage of that opportunity," Coughlin said.