German engineering conglomerate Siemens AG and American energy firm AES Corp entered into a joint venture on Tuesday. 

Demand for large-scale energy storage is growing as the price of advanced batteries tumble and nations turn to renewable energy such as solar and wind power. Pairing big batteries and other storage systems with renewable energy improves reliability without creating climate-changing emissions.

A model of a wind turbine with the Siemens Gamesa logo is displayed outside the annual general shareholders meeting in Zamudio, Spain, June 20, 2017. /VCG Photo

The 50-50 joint venture, called Fluence, will sell the lithium-ion battery technologies currently sold by AES and Siemens, respectively.

"Right now this is a very fragmented market. You're bringing together two of the leaders," AES Chief Executive Andres Gluski told Reuters. 

Siemens technology focuses more on projects for individual companies and enterprises, such as universities and hospitals, while AES targets larger arrays that are incorporated into a region's electrical grid.

 AES Energy Storage battery storage arrays installed at the San Diego Gas and Electric site in Escondido, California, US /VCG Photo

Last week, Tesla beat out privately owned Lyon Group, working with AES, and dozens of other companies for a contract to install the world's biggest grid-scale battery in Australia.

The US energy storage market alone is expected to increase tenfold from 2016 to 2022, to 3.2 billion US dollars, according to a report this year by the US Energy Storage Monitor.

AES and Siemens currently account for about 17 percent of installed energy storage, said Kevin Yates, president of Siemens' energy management division.

The joint venture will be based in Washington, D.C., with offices in Germany and other international locations.

AES subsidiary AES Energy Storage and Siemens’ battery-based energy storage solutions group will be merged into Fluence, which will operate independently of its two owners.

Andres Gluski, president and chief executive officer of AES Corp. /VCG Photo

Gluski said he could not say who top management would be until the company finishes undergoing regulatory processes later this year. The joint venture will start with about 100 people.

Gluski said Fluence expects to maintain the same base of American, South Korean and Japanese battery suppliers as AES.

The companies expect the deal to close in the fourth quarter, pending regulatory approval.

(Source: Reuters)