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Mitsui to Invest in Stem Inc.

Apr. 14, 2015


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Mitsui & Co., Ltd. ("Mitsui"; Head Office: Tokyo, President and CEO: Tatsuo Yasunaga) has entered into an agreement with Stem Inc. ("Stem"), a U.S. based provider of innovative energy management services combining energy storage and advanced ICT, to acquire a share in Stem. Mitsui will enhance its approach to new power business by further developing Stem's business model, and will collaborate closely on its international market entry.

Following the recent rapid increase of renewable energy generation, grid instability and the upward trend of demand charge imposed on peak energy consumption of users are growing concerns for some U.S. states and beyond. For example, demand charge could amount to half of the total electricity bill in states such as California.

Stem's system switches its commercial customers' electricity supplier at peak hours from the electricity grid to the charged energy storage, based on its real-time power demand prediction. This enables Stem's customers' to decrease demand charges with no impact to their operations.

In addition to such service to customers in commercial sectors, Stem has commenced providing demand response*1 solutions to utilities. While utilities have conventionally activated "peaker" power plants when supply-demand balance is tight, Stem responds to the tight supply-demand balance by dispatching electricity from charged energy storage installed at commercial customers' sites. Mitsui, together with Stem, will contribute to developing a more efficient and cleaner energy mix that enables a further increase of renewable energy and leads to stabilization of the electricity grid, through easement of the tight supply-demand balance.

Mitsui envisions that Stem's business model will expand throughout the U.S. and into international markets, and will have extensive discussion with Stem on joint sales and marketing activities for entry to new markets, including Japan, by utilizing Mitsui's wide-ranging customer base. Furthermore, Mitsui foresees developing Stem's business model to realize a virtual power plant*2 business model, by controlling distributed energy storage at commercial customers' sites with ICT and managing both supply and demand on a grand scale.

Along with its development and operation of global IPP (Independent Power Producer) business, Mitsui has been pursuing development of new power business in order to adapt to transition and innovation in the power sector, such as the increase of renewable energy, decentralization of generation, and popularization of energy storage. Through the investment and deployment of a board member to Stem, Mitsui will contribute to the sustainable growth of Stem's business as well as gain hands-on knowledge and experience in new power business and further enhance its business development.

This is the fourth "business innovation project" to be undertaken within Mitsui's new framework established in October 2012 to pursue business innovation. Under the framework, innovative projects are defined as business endeavors with the goal of creating next generation business with high profit generating potential from a long-term business perspective. The new framework enables business units to pursue relevant, long-term business opportunities, without being subject to some of the strict criteria for investment and certain exit benchmarks stipulated in Mitsui's regulations.

*1 Demand response relates to adjusting the amount and/or timing of power demand based on the utilities' incentive programs, tariff rate structures, etc. Stem will provide demand response by switching its customers' source of electricity supply at peak hours from the electricity grid to the charged energy storage, in response to instructions from utilities to decrease electrical consumption, thereby decreasing power procurement from the electricity grid.
*2 The virtual power plant is a business model to control multiple generation assets, demand response, etc. based on the supply-demand of the electricity grid, thereby serving as if it is a single power plant, aiming to develop a more efficient and cleaner electricity grid.

Profile of Stem

Name of Company Stem, Inc.
Head Office California, U.S.A.
Established 2009
Representative John Carrington, Chief Executive Officer
Employees 50
Shareholders Angeleno Investors, GE Ventures, Inversiones Financieras Perseo, Constellation NewEnergy, Total Energy Ventures etc.
Business Activities Providing innovative energy management service and demand response combining energy storage and advanced ICT

Stem's energy storage · ICT system

Stem's energy storage/ICT system

Notice:
This announcement contains forward-looking statements. These forward-looking statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently possessed by it and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, financial position or cash flows to be materially different from any future results, financial position or cash flows expressed or implied by these forward-looking statements. These risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest Annual Securities Report and Quarterly Securities Report, and Mitsui undertakes no obligation to publicly update or revise any forward-looking statements.
This announcement is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.

Information

For inquiries on this matter, please contact

Mitsui & Co., Ltd.
Corporate Communications Division
Shuhei Iwanaga
Telephone: +81-3-3285-7596
Facsimile: +81-3-3285-9819