Storage Supplier Fluence Acquires AMS for Power Market Dispatch Software

Fluence, a leading integrator of large-scale energy storage
systems, has acquired grid software startup AMS.

The deal hands an exit to AMS investors, including former
California Gov. Arnold Schwarzenegger, who bought into the
startup’s early vision of turning commercial buildings into
flexible grid assets. After winning pivotal utility contracts in
California, AMS ran up against the capital constraints of managing
a multi-year infrastructure buildout as a venture-backed company.
In 2017, it
pivoted to software
to dispatch grid assets more profitably in
competitive markets.

That’s the expertise Fluence bought. The joint venture between
AES and Siemens already provides software to its battery customers
to govern system safety and performance, and to dispatch according
to market rules and interconnection constraints. But the AI-backed
real-time trading algorithm AMS built will help Fluence customers
make more money on their projects, said Fluence CTO Brett
Galura.

“Energy storage is really the first truly dispatchable digital
asset on the electric grid,” Galura said in an interview Wednesday.
“We knew that the best way to continue to add value would be to
continue to add more digital capabilities.”

That alignment echoes a partnership from 2019, when integrator
NEC Energy Solutions
teamed up with
�AMS competitor Stem to offer wholesale market
assistance to storage customers. But those companies did not merge,
and NEC ES recently decided to stop pursuing new business. 

The goal of these pairings is to make battery plants, and clean
energy plants more broadly, more profitable and efficient in power
markets, thereby hastening the acceleration of a lower carbon power
grid.

Going digital, going global

AMS went to market in Australia, attracted by the country’s
national power market, the rapid rise of renewables and the
resulting volatility. The software helps plant operators juggle
real-time fluctuations in many different grid services markets to
make the economically optimal bidding decisions. Sometimes that
means
pulling out of markets
, to avoid committing to negative
pricing. Other times it means correctly anticipating and hitting
peaks in demand. 

Successfully optimizing clean power plant bidding strategy
requires crunching too many variable, too quickly, for a human mind
to keep up, AMS contends.

A 100 megawatt wind farm became AMS’ first customer in July
2019. Now AMS dispatches 1.7 gigawatts of Australian renewable or
battery plants, with another 500 MW booked. The company more
recently launched in California, and picked up 200 MW of customers
there.

“It’s really a disruptive technology and the sky is the
limit,” CEO Seyed Madaeni said. “Fluence is absolutely the right
platform for us to scale.”

One of the first orders of business is to take the bidding
platform, which AMS built out for the particularities of the
Australia and California power markets, and adapt it for other
geographies. Fluence operates in 22 different countries, and AMS
will scale to match, the executives said.

Second time’s the charm

They’re not starting from scratch: Fluence and AMS have
collaborated on joint product offerings to customers for the last
couple of years. Indeed, the corporate relationship goes back
further, to when Fluence parent company AES tried to buy AMS in its
earlier incarnation as a project developer with a valuable utility
contract, after AMS won its Southern California Edison contract in
2014.

AMS founder Susan Kennedy
rejected that offer
, and another from French power company EDF.
Kennedy argued that cracking the code of the digital grid
eventually would generate 10x or 20x returns for investors. Kennedy

handed the reins
to Madaeni last fall, but stayed on as an
advisor to the company. When AES subsidiary Fluence tried again
this year, AMS leadership was ready to accept.

“In the energy storage space, you need to be ready to be
surprised at any moment,” Galura said, when asked about the second
acquisition attempt working out. But, he added, “It wasn’t a
surprise to me that AMS had developed this incredible capability on
the market side, given where they started.”

Both executives declined to disclose the selling price for AMS,
which raised at least $52 million in equity funding. The last
publicly announced raise was a
$34 million Series B
 in 2017, which included DBL Partners,
Energy Impact Partners and Southern Company, as well as
Schwarzenegger, whom Kennedy previously worked for as his chief of
staff. Madaeni said “the investors were fully supportive of this
deal,” and actively assisted in closing the transaction.

When companies at different steps in the value chain combine, it
can create second thoughts for potential customers. The creation of
Fluence put some distance between the storage integration business
and AES’ development business, which ostensibly competes with the
sorts of developers who might buy Fluence hardware.

But AMS and Fluence are both technology agnostic, and the
combined companies won’t limit the bidding algorithm to customers
of Fluence’s hardware, Madaeni said. 

“Our biggest leverage is an eye toward portfolio optimization,”
he noted. “The primary objective for that customer is to provide
value in the wholesale markets.”

In other words, a customer that owns battery stacks supplied by
Fluence competitors could still benefit from dispatching them with
a software service owned by Fluence. The software will work with
whatever assets the customer has. And a customer that starts buying
software could move to buying hardware from Fluence down the
road.

As for clients worried about competitors seeing their bidding
strategies, Madaeni said his cloud-based architecture keeps
customer data private and confidential. Since each customer inputs
their preferences around risk tolerance, bidding and hedging, the
algorithm produces customized strategies for each user.

Source: FS – GreenTech Media
Storage Supplier Fluence Acquires AMS for Power Market
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