A123 Systems's Energy Storage for the Grid

A123 Systems's Energy Storage for the Grid

A123 Systems announced recently that it signed an agreement with NEC Corporation of Japan to divest of its grid storage business and other assets related to energy storage for telecom and IT data storage applications.

This mean that A123 Systems, which for some time belonged to Wanxiang Group as a wholly owned subsidiary, will now focus on automotive solutions (hybrid, plug-in hybrid and fully electric vehicles), cell manufacturing and R&D.

"A123 is increasingly focused on the transportation market with a particular emphasis on micro-hybrids. This rapidly growing application segment is attractive because automotive OEMs around the world are steadily turning towards simpler forms of electrification in their mainstream high-volume vehicle lines to address the ever-increasing regulatory requirements of lower emissions and better fuel economy around the world. A123’s battery technology is very well suited to the requirements of this market and the company is currently producing 12-volt micro-hybrid batteries for numerous programs across three vehicle manufacturers."

Jason Forcier, CEO of A123 System, stated:

“Our move to sharpen focus on current and future customers in the global transportation market demonstrates strategic clarity in our business. Our customers and partners around the world will benefit from the organization focusing its R&D strength and system engineering capabilities on clear priorities. We look forward to continued growth as a provider of leading-edge energy storage technology to the world’s vehicle manufacturers as they continue to develop the most economical forms of electrification.”

Bud Collins, President of A123 Energy Solutions, remarked:

"We are delighted by the combination of strengths of the two companies. Combining our experience in the grid storage space with the world's leading utilities and power producers, NEC's strength in ICT, and its lithium-ion manufacturing scale, we believe the resulting company will be a formidable organization, well-equipped to handle the emerging smart energy sector across the globe."

NEC Corporation of Japan will incorporate A123 Energy Solutions unit in its Smart Energy Business Unit (calling it NEC Energy Solutions) and will take over facilities in Westborough, Massachusetts and Chesterfield, Missouri. A123 Systems of course will retain all of its cell manufacturing locations (including in Michigan and China) and will now be a cell supplier to NEC.

NEC will pay for this part of A123 approximately $100 million. Probably not bad for Wanxiang if we take into consideration that almost all of A123 was bought for $260 million, and now Wanxiang still has the core business and NEC as a customer.

On the NEC side we read:

"NEC Corporation announced today the acquisition of the A123 Energy Solutions business unit of A123 Systems, LLC.  This acquisition, for approximately USD $100 million, strengthens the energy storage capability of NEC's smart energy business, a core segment of its Mid-term Management Plan's commitment to social infrastructure.  A123 Energy Solutions will be integrated into the NEC Group of companies and operated globally as a key element of its business.  An agreement on the terms of the deal has been finalized and a new company "NEC Energy Solutions" is slated to begin operation in June 2014 under the direction of NEC.  A123's existing cell manufacturing and sales, research and development, and automotive operations will remain the core focus of A123 Systems, LLC."

Probably most of us wonder why NEC, as battery manufacturer, is not using own cells. Well, NEC uses a different chemistry and LiFePO4 are well suited for energy storage because they are long-lasting. NEC also lost its bid in the A123 Systems auction, so Japanese firm was willing to buy at least this part of A123 long ago. Maybe NEC has better sales channels for energy storage than Wanxiang? Anyways, NEC already said that will form a JV with Wanxiang for business in China.  So, its seems win-win all around.

"With this acquisition, NEC will become the world's leading supplier of lithium-ion grid energy storage systems.  A123 Energy Solutions has deployed over 110MW of its Grid Storage Solutions (GSS(TM)) worldwide with the vast majority of these systems already in revenue service. The company will continue to supply systems utilizing A123 Systems' Nanophosphate(R) lithium-ion cells and support all existing installations.  NEC Energy Solutions, with access to NEC Corporation's world-class information communications technology (ICT) and A123 Energy Solutions' system integrations expertise, is now better prepared to address the increasing global need for energy storage. In addition, NEC's high quality, cost-effective lithium-ion technology adds to the ever-growing portfolio of energy storage technologies available for future use in A123 Energy Solutions' GSS platform.  At the same time, NEC will leverage A123 Energy Solutions' experience in commercial batteries in order to serve NEC's telecommunication carrier, enterprise and government customer base, thereby helping to drive the global expansion of NEC's smart energy business."

"A123 Systems, through its A123 Energy Solutions unit, has been regarded as a leader in lithium-ion grid energy storage systems.  It provides not only the energy storage technology, controls, and supporting equipment in a turn-key packaged solution, but also the application modeling to properly size an energy storage solution, and the service and support required to maintain safe, high performance energy storage operation.  A123 Energy Solutions has supplied some of the world's leading utility companies and independent power producers around the world including applications in North America, South America, Europe, the UK, and Asia, including recent 2MW and 500kW installations in China.  NEC is slated to establish a joint venture company with Wanxiang and its affiliates to address the growing China market."

Takemitsu Kunio, Senior Vice President of NEC Corporation commented:

"With these combined strengths, NEC Energy Solutions will be able to help satisfy the growing demand for energy storage worldwide, whether driven by increased penetration of renewable energy from wind and solar, more effective grid stabilization services like frequency regulation and frequency response, or the desire for more efficient reinforcement of existing transmission and distribution grids. Improving energy reliability, sustainability, and security, we will provide turn-key energy storage solutions, ranging from utility-side storage at the megawatt scale, down to behind-the-meter storage at the kilowatt scale for residential, commercial, or industrial sites."