The EDF Group subsidiary Dalkia has rounded out its industrial energy portfolio with the acquisition of combined heat and power (CHP) player Aegis Energy Services.
Dalkia, whose DK Energy U.S. arm paid an undisclosed sum for the energy services company Groom Energy Solutions in 2016, said in a press release that the Aegis purchase would “offer U.S. customers a wider range of services to step up their sustainable energy performance.”
Aegis Energy Services designs, installs and operates small-scale, gas-fired CHP systems in the Northeastern and Mid-Atlantic U.S.
It has customers in the hospitality, healthcare and multi-unit residential markets and has been developing small-scale CHP offerings for more than 30 years, according to Dalkia.
“Aegis Energy Services will expand Dalkia's offering and allow the group to develop innovative solutions to manage the energy performance of buildings,” the company stated.
The press release notes that Aegis’ management team and its president, Lee Vardakas, will remain with the company as part of the Dalkia Group.
According to an August 2018 strategy document shared with GTM, Dalkia is looking to build itself up as a building energy-efficiency services company with an initial focus on commercial and industrial (C&I) markets.
Within the strategy, Groom is earmarked to take care of production systems, sub-metering infrastructure and energy-efficient lighting, heating, ventilation and air conditioning technologies.
EDF, meanwhile, will provide utility energy services and, through its EDF Renewables arm, solar-plus-storage equipment. With Aegis providing CHP, Dalkia now considers itself to have a grip on all the parts of the C&I energy ecosystem.
The strategy mimics similar moves by other major energy companies, according to Ben Kellison, director of grid research at GTM Research. “EDF is following Centrica's and Engie’s early acquisitions in the space,” he said.
In February, for example, Centrica announced it would be offering CHP, solar, battery energy storage and standby generators, along with the software and services to put them to use, via a new U.S. business unit called Centrica Business Solutions.
Similarly, the Italian power giant Enel has been looking to become an integrated behind-the-meter services provider with acquisitions including the demand response firm EnerNOC and the battery storage specialist Demand Energy.
Oil companies, too, have been looking to lock in C&I revenues with full-service offerings.
Shell New Energies has carried out at least half a dozen grid edge investments and acquisitions in the last year, targeting companies including the thermal storage firm Axiom Energy, microgrid company GI Energy and residential energy retailer Inspire Energy.
Despite their popularity, the value of these full-service strategies has yet to be established, Kellison said.
“There have not been enough instances of combined services contracts with C&I customers to definitively show that this is the model and the time to secure significant, replicable business,” he said.
“It is, however, a great way to buy many low-cost businesses to test what combinations of services become successful," Kellison added.
For now, Dalkia’s acquisition of Aegis, for an undisclosed amount, has added some excitement to the usually sleepy world of CHP.
GTM Research figures from 2017 show the U.S. CHP sector is on the wane, with installations falling from a high of 823 megawatts of capacity in 2014 to just 244 megawatts in 2016, the lowest level so far this decade.
The figures also show installations this decade being unlikely to reach the levels achieved from 1985 to 2005. This was the golden age for CHP in the U.S., with around 50 gigawatts of capacity being installed in two decades.
Around three-fifths of U.S. CHP is for industrial use, with healthcare and education accounting for another 25 percent and 9 percent, respectively, of total installed capacity, based on GTM Research’s analysis of Department of Energy CHP Installation Database figures.
In spite of Dalkia’s interest, said Kellison, “We are not seeing or expecting a CHP renaissance. We are expecting continued growth among smaller commercial CHP units that will become a stronger base for deployment year over year, versus the larger facilities of the past.”
Kellison’s grid edge analyst colleague Colleen Metelitsa echoed this view. “We don’t yet have a good renewable solution for industrial heat," she said, "leaving CHP as a still-required solution."