What was behind your thinking with the Kokam acquisition?
It is quite clear that solar energy systems are becoming more and more integrated with storage. And as the world of energy and the grid are evolving to distributed generation, that is also going to include more and more presence of energy storage systems. That is the new future.
Just look at the solar segment: More than 30% of solar energy systems are foreseen to be storage coupled. In such a technological environment where the role of the inverter is evolving to be the energy manager of the building and the energy manager of the home, we wanted to gain more understanding into storage, to diversify our offering and to be able to offer not just solar inverters but also batteries. This is an important diversification for our business – especially in a world where margins are being squeezed for inverters and in a world where we want to own a bigger part of the energy system. In a more immediate sense, we want to be able to have access to batteries – because not having access to batteries limits our ability to provide solar plus battery systems to our customers.
And what attracted you to Kokam?
There are not many high quality companies that manufacture batteries. We were looking for a company that is tier one in terms of quality and capabilities and that has what we feel is a superior technology. Kokam is all of these things. It is not only a battery company, but also a battery cell technology. Its cell technology is also differentiated and it provides batteries not only to stationary storage, but also to the aerospace and EV markets. It is a very high quality cell with high end technology. We have also seen that what is unique to Kokam is that the cobalt content within the cell is relatively minimal when compared to other technologies on the market. This offers a roadmap for a better control of the costs.
We are seeing huge battery cell and module capacity online in China. But this market is going to be more competitive isn’t it?
That’s right. Everyone is working on more capacity, very similar to other such markets there is expected to be a decline in prices and I am not sure we are nearing the point of oversupply – but there is such a risk in the medium-term future. That being said, it is expected that there is going to be a big increase in demand, and like always, there is going to be a real market for high quality solutions and not just very cheap, low-end solutions.
With that, we think this diversification makes sense and we believe we can supply a lot of storage solutions to our customers.
What kind of production capacity does Kokam have in battery?
Today the capacity is relatively minimum – less than 1 GWh a year. But plans are underway to increase that capacity in order to service demand. Kokam is already a clear and significant player in utility scale storage, which currently without Kokam we are not servicing. But Kokam also has customers in automotive, aerospace and other storage verticals. So we are planning to increase that capacity to well above 1 GWh.
Culture is always a challenge with acquisitions and mergers. How are you coping with that?
We are keeping Kokam as a separate company, and they won’t be completely absorbed into SolarEdge. Kokam is a storage company. And yes, when you start working more intimately with a company that has a different culture there are always complexities and challenges. SolarEdge already has more than 25 offices around the world, and people also in Korea, and while we’re not culture experts – we are exposed to the large variances between different companies. It is not only Korean culture versus American culture, but it is also about company culture. But that is one of the challenges and as we grow we will have to learn and adapt. Kokam is an excellent company with an excellent management team, so I think it will be ok, but that challenge will exist.
How long will it be before we see a SolarEdge storage offering using the Kokam cells?
I am not sure yet. We are working on a plan and there are many variables: one is the supply of cells, the other is the market strategy – it is not like we are abandoning our current battery partners. We will continue the integration and work with them. The plan is not final yet and there are many different parameters to weigh in: capacity, timeline, R&D, availability in the market, compatibility – so the plan is not set yet.
For the customer, what is the advantage of having an integrated system – because the StorEdge is already familiar to the market?
The first clear advantage in our view in the near-term is access to cells. Today there is still a shortage of battery cells on the market, simply due to capacity and location issues. So we will have access to cells and that will be reflected in different solutions. The second is that the Kokam cells have unique values in portability, number of cycles and very high quality – and we will be able to turn that into superior products.
Did you hear of storage customers waiting for batteries for long periods – there were reports of Powerwall customers waiting for long periods. Has that been an issue?
We are not anywhere near the situation from what I hear from rumours on the market in terms of the Powerwall – we are nowhere near that. But on the other hand I wouldn’t say that we service all of the markets that we would like to service. Once we say that a storage product is available in a specific market, we make every effort with our partners to make it fully available in that market. An indication of that is that there are markets that would like to get storage systems and we are not releasing the product yet – because we feel that there might not be battery availability, so that is how we try to solve it.
But it is nowhere near as some of the rumours relating to Powerwalls.
A condensed version of this interview was published in the February 2019 version of pv magazine global. You can check out the full speaker list and program for the Future PV Roundtable at Intersolar Europe 2019 here. Register for free today!