Update: SPI buys stake in ZBB ahead of storage deal

Update: Chinese solar developer Solar Power, Inc. (SPI) has taken acquired a $33.4 million stake in U.S. energy management group ZBB Energy Corporation as part of a wide-ranging pact that includes a 40 MW supply agreement for energy storage systems over a four-year period.

The deal could lead to SPI owning up to a 54% stake in ZBB, according to Dilek Wagner, ZBB’s vice president of finance.

The companies estimate the value of the initial supply deal at between $80 million and $120 million, depending on the mix of storage applications and installation requirements.

ZBB said the strategic partnership created “a solar industry powerhouse” that would combine solar PV systems with energy storage and systems management solutions for utility, commercial and residential applications.

"In a short period of time, SPI has become a major global player in providing PV systems solutions and innovative renewable energy financing models,” said ZBB Chairman Paul Koeppe. “SPI has a strong, worldwide presence in the highest growth markets for our products. This agreement gives us immediate access to regions and countries where we lack a presence today, providing a major opportunity for ZBB to become a global leader in energy storage and energy management systems."

Koeppe added that ZBB expected the new partnership “to completely change the paradigm at ZBB from development stage to a high growth manufacturing company."

The Wisconsin-based ZBB recently expanded its product portfolio to include dedicated commercial and industrial building focused solutions, which it said complimented SPI’s strength in addressing distributed generation (DG) system solutions. The company said SPI’s significant presence in utility-scale PV projects provided an excellent opportunity for its next-generation multi-megawatt-hour storage products.

"This partnership between SPI and ZBB Energy is all about accelerating global solar penetration through the marriage of solar plus storage," said SPI Chairman Xiaofeng Peng. "Energy storage systems are becoming vital to PV system expansion worldwide due to a number of factors, and we believe that ZBB’s leading technology will help SPI become an early-mover in capturing this huge global opportunity.”

Peng stressed that the global shift toward DG solar had magnified the need to develop viable energy storage solutions for the commercial and industrial segments.

SPI and ZBB will close the supply deal at the closing of the securities purchase agreement. The $33.4 million deal consists of a combination of newly issued ZBB common stock as well as the company’s convertible preferred stock. SPI has agreed to buy 8 million shares of ZBB common stock for approximately $5.3 million and 28,048 shares of ZBB Series C convertible preferred stock for some $28 million. Following the capital infusion, ZBB will have more than $45 million of cash on its balance sheet.

In addition to the initial $33.4 million investment in ZBB, the agreement also “contemplates” that ZBB will issue to SPI a warrant to purchase 50 million shares of ZBB common stock for $36.7 million.

Speaking to pv magazine, Wagner said that at closing, SPI will own approximately 16% of ZBB’s common shares, pointing out that the preferred stock had very limited rights: no right to vote and no economic rights other than a liquidation preference equal to the purchase price.

Once the 40 MW worth of solar projects with ZBB are completed, SPI’s preferred stock will be converted into ZBB common shares in four tranches," Wagner explained. Assuming no additional shares are issued and disregarding all options, warrants, and restricted stock units (RSUs), SPI will then own approximately 54% of ZBB, she added.

The purchase agreement remains subject to approval by ZBB shareholders.

An earlier version of this story ran April 21.