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Solar developer SunEdison has acquired a young startup called Solar Grid Storage, which develops battery projects in conjunction with solar projects. The companies planned to announce the deal on Thursday morning, and Reuters reported the purchase Wednesday night.

Financial terms of the deal were not disclosed, but SunEdison said it’s acquired Solar Grid Storage’s four operating storage projects, as well as its project team and pipeline. Solar Grid Storage is a three-and-a-half-year-old startup based in Philadelphia that is run by CEO Tom Leyden, a former executive at PowerLight and SolarCity. In an interview with Gigaom in 2013, Leyden presciently compared the company to a SunEdison of storage.

The acquisition shows the emerging interest by solar companies in energy storage projects, and signals the coming growth of the grid storage market, which now has large global players vying for it, like Panasonic, Tesla Motors, and AES, as well as up-and-coming startups like Stem and Advanced Microgrid Solutions. (Here’s 12 energy storage startups to watch in 2015 — number 12 is Solar Grid Storage).

U.S. state mandates are helping to grow this industry. At the forefront of the energy storage market is California, which declared a mandate to have its three large utilities install over 1 GW of energy storage by 2020. Those projects need to be completed by 2024 and some of them are already under way.

Another driver of this market is the lowering costs of lithium-ion batteries. While these types of batteries have been used in cell phones and laptops for years, they have long been too expensive for grid storage. But as companies like Panasonic (and Tesla) ramp up production massively, and see lower costs of these batteries, the power grid is becoming an obvious place to use them.

Why does the power grid need energy storage? One reason is clean power. Solar and wind energy are variable, so they stop and start when the sun goes down or the wind stops blowing. If battery banks can be paired with wind and solar farm, batteries can store the clean energy when it’s available and then the grid can tap into the batteries when the clean power inevitably stops.

Beyond clean power, batteries can also just help manage the grid better and provide new services for power companies.

Solar Grid Storage develops projects that pair solar panel systems with energy storage equipment. The company’s storage systems provide both backup power and also sell energy delivery services to local utilities and grid operators.

The startup builds an energy storage system — using lithium-ion batteries from Panasonic or LG, and off the shelf inverters — and puts it inside a steel container and ships it to a customer. Much of the secret sauce is not in the hardware but in the software to manage the paired solar and storage system.

Now that Solar Grid Storage is part of SunEdison, you can expect to see more and more energy storage projects from the solar developer. Leyden tells Reuters: “My mandate now at SunEdison is storage deployment, and that means nationwide.”

As the grid storage market grows, solar companies will be increasingly interested in storage. Given it’s a boom time for solar right now, and the prices of panels are so low, the big solar companies (that develop projects) have the balance sheet to move more substantially into the storage market.

SunEdison competitor SolarCity has a deep relationship with Tesla, and the two companies pair SolarCity’s solar systems with Tesla’s battery packs. Perhaps the rise of Tesla’s gigafactory is making everyone in the clean energy industry a little bit nervous.