Stem Will Operate Massive AMS Battery Portfolio in Southern California
Energy storage software company Stem will operate a 345 megawatt-hour portfolio of distributed batteries in Southern California Edison utility territory. But it didn’t develop or build these batteries—it’s taking over from long-time competitor AMS.
The owners of the portfolio, Swiss infrastructure fund manager SUSI Partners and South Korean power producer SK E&S, will pay Stem to control the fleet of 87 batteries at commercial properties, in order to meet their obligations to SCE. AMS is exiting that role to focus its resources on a newer business, a bidding algorithm for energy markets .
“AMS is working hand in hand with the team at Stem to ensure a smooth transition of the projects, after which AMS will be 100 percent focused on our A.I. [software as a service] trading products,” CEO Seyed Madaeni said in an email.
Managing these batteries isn't a simple task. Stem will be balancing their duties to provide capacity to the utility with managing demand charges for their host customers. They'll also be tracking their operations to ensure they're greenhouse gas emissions neutral to comply with the terms of California’s Self-Generation Incentive Program. That medley of obligations and revenue streams is known by storage startups as “the value stack.”
Transitioning control is largely a matter of updating software and networking, with some minor hardware changes, Stem CTO Larsh Johnson said in an interview. The switch will require site visits, and could take a few months, given the number of sites and complications related to coronavirus safety.
“We’re spending a fair amount of time up front making sure we have all the details worked out,” he said.
First of its kind
Owners have swapped out batteries and controls for specific projects based on performance needs. And Stem had picked up a couple dozen sites from another operator previously, Johnson said. But a wholesale software swap at the scale of 345 megawatt-hours is unprecedented for the storage industry.
In part that’s because the model of building networks of commercial battery portfolios first took off in California with Stem, AMS and Green Charge (later acquired by Engie). Supportive state policies and utilities willing to give it a try combined to turn California into the non-residential storage hotspot over the last five years.
Stem and AMS won capacity contracts with SCE in 2014, then signed up commercial customers to host the batteries and receive bill savings by dodging demand charges. AMS plans to install the final 6 percent of the portfolio in the third quarter, Madaeni noted.
Both companies eventually grappled with the challenges of funding a grid infrastructure development business as a startup; both shifted to emphasizing their software services. For Stem that involved partnering with solar developers to assist them with battery storage....