Johnson Controls is shifting back toward its roots with its announced move to separate its massive automotive unit and focus instead on smart building controls and energy storage. Management said it is open to an outright sale, spinoff or formation of a joint venture to shed the unit, with a decision expected before year's end.
Milwaukee-based Johnson Controls said Wednesday it has retained Goldman Sachs and Centerview Partners to explore options for the automotive business, a collection of seating and related assets that accounted for about 40% Johnson Controls' $43 billion in 2014 sales.
The planned split is the latest in a series of sales for Johnson Controls, which in March said it would sell its facilities business to CBRE Group for $1.48 billion, and in years past sold its HomeLink unit to Gentex Corp. and its auto-electronics assets to Visteon.
The resulting company will be focused primarily on battery and energy-storage technology and its building efficiency business, which makes HVAC systems and related controls for residential and commercial properties.
2015 has proven to be a landmark year for energy storage particularly, which is expected to grow at a CAGR of 15% from 2015 to 2020. This April we saw the launch of Tesla’s Powerwall, an automated, compact home battery that charges using electricity generated from solar panels, or from the grid when utility rates are low, and powers your home in the evening.
The Powerwall, an adaptation of the battery technology used in Tesla Motors electric vehicles (EV). The stackable technology has potential beyond homes, and has quickly found its way to commercial and industrial buildings.
Earlier this month, Advanced Microgrid Solutions, a provider of energy-storage systems, agreed to buy as much as 500 megawatt-hours of battery capacity from Tesla. About 40% of that order will be used in developing 50 megawatts of storage for Edison International’s Southern California Edison unit, Advanced Microgrid Chief Executive Officer Susan Kennedy told Bloomberg.
The deal comfirms that Tesla’s battery technology, initially designed for its electric vehicles, is also gaining traction for other applications. Advanced Microgrid evaluated numerous suppliers and “it was very clear from the beginning that Tesla’s was just a standout technology”, Kennedy said. “We intend to use Tesla batteries on a huge number of our projects going forward, and our pipeline is a lot bigger than just the Edison project,” she continued.
Within two months of Elon Musk’s Tesla unveiling its stationary energy storage applications; Powerwall and Powerpack. Automotive giant General Motors Company (GM), announced plans to enter the promising building energy storage market. However, unlike Tesla, GM is not developing a $5 billion “Giga factory” to manufacture new battery units. Quite the opposite actually, GM aims to recycle depleted battery packs that have been salvaged from its retired electric vehicles.
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Over time, a battery begins to lose its ability to quickly discharge power, something that’s important for a car to, say, go uphill. Other purposes, like powering a building, don’t require the same level of discharge speed. So, when a battery is no longer good for speeding you from 0-60, it can still keep the lights on just fine.
Disposal of vehicle and stationary battery packs is a significant environmental issue and casts a dirty shadow on the new saviour of the clean energy movement. GM’s reusing policy certainly works from a PR perspective, but the business and environmental logic is also sound.
On Tuesday, at its Renaissance Centre headquarters, GM displayed a system to power the company’s Enterprise Data centre. The system employed five used battery packs from its popular plug-in hybrid Chevrolet Volt, along with a twin set of wind turbines and a solar array.
GM’s used energy storage units can be used as a primary backup power source, but would mainly serve as a “daily cycling unit.” Essentially, these will be recharged on a daily basis to aid in the power load management, or to store energy gathered from solar panels during the day.
An EV battery pack’s life expectancy is eight to ten years, GM is offering an eight-year or 100,000-mile warranty for example, however as much as 80% of the storage capacity remains at the end of its useful EV life.
This raises the interesting prospect that as the increasing number of electric vehicles purchased over the last five years, begin to mature in the next five years, and the world will then have a steadily increasing stream of battery packs, perfectly adequate for use in buildings and on grid.