Editor's Note: The headline of this story has been updated to clarify that the merger between AES and sPower did not occur at the behest of Google.
The AES Corporation, a Virginia-based generation and power distribution company, announced on Tuesday that it will merge with Utah-based wind and solar developer sPower.
The merger will streamline the development of energy and 24/7 clean energy offerings already in the works, according to Leo Moreno, president of AES Clean Energy.
While 24/7 energy packages aren't entirely unique, Bloomberg analyst Kyle Harrison said the merger will likely result in a win-win-win, allowing both companies to capitalize on a rising wave of corporate interest in reliable sources of clean energy while making the process more efficient for customers.
Once the merger is complete and sPower has fully integrated into AES's clean energy development business, Moreno has large aspirations for his growing team.
"Our vision is carbon-free energy every single hour of the year," he said. "The product we're taking to large customers today is a 24/7 product."
Given the intermittency of renewable energy, accomplishing that will require a combination of technologies, including solar and energy storage, technologies in which sPower has become a leader, Moreno said. The merger with sPower, in which AES was already a shareholder, will accelerate the realization of that vision, he said.
Leading U.S. companies have already begun to shift their focus from offsetting carbon emissions through purchasing credits, to pursuing 24/7 clean energy goals intended to fully eliminate carbon emissions. AES, Moreno said, entered into a strategic alliance with Google roughly a year ago. Four months ago, the company issued an RFP on a 24/7 project in Virginia that will provide a gigawatt of clean energy from wind, solar, energy storage and other renewable resources.
Google's 24/7 clean energy commitment — in which the company has pledged to eliminate carbon emissions by ensuring all its energy needs are met consistently with locally-produced renewable energy — has the potential to change "the whole market," Moreno said. AES is now pursuing other large tech customers like Microsoft and IBM, he said.
After they began working with Google, Moreno said AES realized that if they wanted to create revolutionary storage and eventually demand-side products to realize this 24/7 vision, that merging the AES and sPower teams would be a good next step. With the merger, he said, AES hopes to make its 24/7 energy offerings available across the U.S.
The merger was not just about sPower's "capability, but the motivation," Moreno said. "The team is passionate about decarbonizing the whole grid."
The two companies also share overlapping product offerings and interest in the same technologies — namely solar and energy storage, according to Harrison. "Getting those companies under the same umbrella helps to streamline things," he said, and will likely produce "a win-win for corporate buyers and also the stakeholders."
AES isn't necessarily the first company to offer 24/7 clean energy packages — such products are available from companies with the capacity to combine output from multiple existing renewable energy resources, according to Harrison. What Google wants, he said, is slightly different — they want to be a leader, ensuring that the clean power projects they fund create generation assets that would not have been built without Google's involvement.
But round-the-clock clean energy products are the likely next step in the evolution of corporate thinking about clean energy, Harrison said. Companies outside top tech firms like Amazon and Microsoft may be unable to follow in Google's precise footsteps for 3-5 years, or until energy storage achieves price parity, but demand for mixed-resource renewable energy development is growing, he said.
For companies lacking the billions of assets at Google's disposal, entering a bilateral PPA for a single development, like a wind farm, represents a fairly significant business risk due to the intermittency of the resource. A bundled clean energy retail product, Harrison said, mitigates that risk and makes clean energy more available to more customers. And as more companies make renewable energy commitments, demand for such products has increased.
"From that standpoint," Harrison said, "this is a great business move."