'Our time is now': Sonnen focused on storage surge amid talk of Shell sale

Virtual power plant specialist sonnen GmbH remains focused on multiplying its remote-controlled fleets of solar-powered battery storage systems at homes in Europe, the US and Australia as parent company Shell PLC reportedly plans to sell the company.

"Growth is very robust," sonnen CEO Oliver Koch said at the RE+ trade show in Las Vegas, held Sept. 11–14.

The vast majority of the roughly 140,000 residential battery systems that sonnen has supplied have come since Shell purchased the company four years ago, said Koch.

This year, the home battery supplier, which networks systems into virtual power plants (VPPs) relying on software, doubled its annual manufacturing capacity in Wildpoldsried, Germany, to 120,000 systems to address an unprecedented jump in demand.

Since the beginning of 2022, sonnen's global workforce has more than doubled to 1,650, Koch said.

"Our time is now," added Blake Richetta, chairman and CEO of US affiliate sonnen Inc., which supplies battery systems from a production facility in Atlanta.

The comments came after German daily newspaper Handelsblatt, citing unnamed sources familiar with the matter, on Sept. 7 said Shell aims to sell at least 51% of sonnen after paying roughly €500 million for the company in 2019. The company could be valued at €1.35 billion to €1.8 billion, or 3x to 4x its expected 2023 revenue of €450 million, according to Handelsblatt.

Sonnen executives acknowledged the report but declined to comment directly on any such plans.

Shell, which did not respond to a request for comment, appears to be making adjustments to its power business, including a recently disclosed deal to sell its renewable electricity and broadband retail arm in the UK and Germany to Octopus Energy Ltd.

'Miniature version of the future'

In the US, sonnen is working to expand the footprint and value of its VPPs. At an existing solar-powered apartment complex in Herriman, Utah, where PacifiCorp's Rocky Mountain Power division harnesses over 600 battery systems, sonnen is "expanding the breadth and the depth of the grid services value stack," Richetta said in an interview. "It's kind of like a miniature version of the future."

The project, which includes about 5 MW of rooftop and carport solar capacity, electric vehicle charging and 12.6 MWh of energy storage, has helped Rocky Mountain Power avoid grid infrastructure investments in Herriman. The on-call battery fleet, controlled by Rocky Mountain Power, also offers emergency back-up power and provides the grid with peak energy, demand response and other capabilities.

"This is big, in America, for behind-the-meter residential," Richetta said.

A new report from the US Energy Department included an urgent call to utilities and other industry stakeholders to launch VPPs on a grand scale to support the transition to zero-carbon electricity. VPPs could cover 10% to 20% of peak demand by 2030 with 80 GW to 160 GW of capacity, according to the report. Such reach could unlock an estimated $10 billion in annual grid costs and "redirect" spending from traditional peaker plants, the report said.

"I think people recognize that in order to make the grid resilient, dependable, cheap, etc., virtual power plants are going to be essential," Jigar Shah, director of the US Energy Department's Loan Programs Office, told S&P Global Commodity Insights.

Shah highlighted the Rocky Mountain Power program, in which sonnen is a major participant, as a VPP success story.

"They're very tight around what they expect, and they've been getting what they expect," the DOE official said.

California 'rocket ship'

Richetta expects to roll out VPPs with more flexibility by leveraging the new 30% investment tax credit for stand-alone storage, passed as part of the Inflation Reduction Act. It allows owners of batteries to qualify for the incentive when charging from the grid, such as during periods of excess renewable energy generation. Under previous rules, the credit applied only when charging directly from onsite solar.

In California, sonnen is ramping up its supply of storage systems that enable customers to benefit from a reform to the state's net energy metering program for rooftop solar adopted in April. The new "net billing tariff" slashed the value of distributed solar sent back to the grid and encouraged the use of batteries to support grid reliability and save the economics of rooftop photovoltaic (PV).

As a result, battery and PV system suppliers are expanding their storage offerings. For its part, sonnen has introduced a program, dubbed sonnenConnect, that relies on software-steered batteries to take advantage of California's time-of-use electric rates "in a way we are confident no one else in the industry can do," Richetta said. "The potential is [like] a rocket ship."

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