Generac Power Systems is acquiring Enbala Power Networks, a major step toward putting its market-leading backup generator business and its fast-growing behind-the-meter battery-solar fleet to work as a power grid resource.
Financial terms of the acquisition weren’t disclosed, but Enbala CEO Bud Vos said in a Tuesday interview said that the company's "investors would call it a very large success.”
Enbala’s distributed energy resource (DER) orchestration software platform manages roughly 600 megawatts of flexible loads including pumps and motors, backup generators and behind-the-meter batteries for grid services in the U.S., Canada and Australia, according to Wood Mackenzie data.
That software can now be put to use enabling Generac’s existing fleet of thousands of megawatts of residential and industrial standby power generation deployed across the United States, as well as its expanding business selling its PWRCell batteries for standalone or solar-linked home backup.
Tuesday’s acquisition puts Generac in competition with a host of companies aggregating and orchestrating behind-the-meter DERs as virtual power plants, or VPPs. Leading U.S. residential solar provider Sunrun is a chief contender, with solar-battery aggregations in California, Massachusetts, New York and Hawaii. Tesla has been aggregating Powerwall batteries in Australia and Europe, and sonnen has launched solar-battery VPP projects in Germany, Australia, Utah and California.
The deal is also in line with other generator manufacturers acquiring or partnering with grid services technology companies, both to enable their generators to serve as grid assets and to enlist batteries as part of their portfolio, WoodMac microgrid analyst Isaac Maze-Rothstein said. This list includes Cummins partnering with Tangent, Wärtsilä buying Greensmith, Aggreko acquiring Younicos, and Rolls-Royce and grid giant ABB partnering on microgrid development, he explained.
“Distributed generation is a critical next step for utility companies faced with meeting peak demand while also dealing with capacity constraints and regulatory restrictions,” Aaron Jagdfeld, CEO of Wisconsin-based Generac, said in a statement. “We believe their business model can be incredibly synergistic with our business.”
Increasing consolidation in the DER aggregation market
Generac’s major presence in the residential and business backup power space, plus Enbala’s long experience with utilities, is likely to boost the value of this kind of DER aggregation for both backup power customers and utilities, said Elta Kolo, content lead for Wood Mackenzie’s Grid Edge team.
“Backup generators are not going away anytime soon,” Kolo said, with storms and wildfires spurring a significant uptick in demand for emergency power. Utilities are eager to find ways to incorporate those resources to shift peak loads to reduce grid stresses, avoid costly grid upgrades and manage the disruptions caused by increasing levels of intermittent renewables on their systems.
Meanwhile, energy retailers and other wholesale market actors are enlisting DERs to provide bulk capacity as well as faster-responding ancillary services and frequency regulation. The Federal Energy Regulatory Commission’s passage of Order 2222 last month is set to open the country’s energy markets to much broader DER participation in years to come.
Wood Mackenzie predicts that U.S. DER capacity will reach nearly 390 gigawatts by 2025, with a mix of flexible loads, on-site generation and solar, batteries, electric vehicles and other clean energy technologies offering a massive new resource for utilities and grid operators.
This potential is driving increasing consolidation in the DER space, Kolo noted, with Enbala one of the more prominent companies that had yet to be acquired. In the residential space, a key competitor is Alarm.com’s EnergyHub, which is aggregating DERs from smart thermostats to solar-battery systems and EV chargers for utilities including Arizona Public Service, National Grid and Baltimore Gas & Electric.
European competitors tapping North American markets include REstore, acquired by U.K. energy company Centrica; Kiwi Power, which is working with Engie in Texas; and Enel North America, which acquired U.S. demand response provider EnerNOC, battery provider Demand Energy and EV charging company eMotorWerks.
Enbala’s 10-year deployment and investment history
Denver-based Enbala got its start aggregating pumps, motors and other variable loads into frequency regulation markets run by mid-Atlantic grid operator PJM and Ontario's Independent Electricity System Operator, and coordinating chillers, refrigerators and other behind-the-meter flexibility as a partner in Canada’s PowerShift Atlantic project.
In mid-decade, it shifted from that direct market participation model to focus on serving utilities via demand response and DER integration programs. Its utility customers include Portland General Electric, Public Service New Mexico, Sacramento Municipal Utility District, Eversource and Ontario, Canada utility Electra, as well as other undisclosed partners, Enbala's Vos said.
Enbala has expanded into managing behind-the-meter batteries and solar systems, with pilot projects in Hawaii using rooftop PV solar inverters and behind-the-meter batteries for Southern California Edison’s Integrated Grid Project, and a major project with Australia’s AGL to manage the country’s largest solar-battery VPP project. It's also working on projects in Europe and Japan, Vos said, though he declined to provide more details.
The acquisition won’t change Enbala’s business model, Vos stressed. The company will continue aggregating DERs from multiple vendors and providers as a standalone business within Generac. But it will be integrating its software with technologies from other companies Generac has acquired over the past several years to enhance its grid services efforts, including inverter-battery technology provider Pika Energy and customer-energy-data management provider Neurio.
Enbala and Generac have been working together on a “couple of proposals and initiatives” that are in development with utilities, Vos said. “We’ve known each other as businesses for quite a long time.”
Enbala has raised about $45 million in venture capital investment since its 2010 founding, including a $13.5 million round last year, a $12 million round in 2017 led by ABB Technology Ventures and joined by National Grid, and $14 million in 2015 from investors including Obvious Ventures, GE Energy Ventures, Chrysalix Energy Venture Capital and EnerTech Capital.