Two large energy companies, Siemens and AES Corporation, are joining together to start a new company aimed exclusively at building utility-grade batteries. The company, called Fluence, will market these large lithium-ion storage systems to utilities and energy providers around the world.

The news follows reports from last week that AES closed on a deal to build a 100MW/400MWh battery system in Southern California, which would be tied to a new, 1,284 MW combined-cycle natural gas generator. The system will replace 1960’s-era power plants in Los Alamitos, Huntington Beach, and Redondo Beach. The gas generator is expected to be online by 2020, and the storage is expected to be online by 2021.

Siemens and AES will each have a 50-percent stake in Fluence, pending approval from US regulatory bodies, which the companies say they expect in late 2017. Both AES and Siemens have their own energy storage platforms—software systems that allow operators to manage how the batteries are charged and discharged—and a press release this morning noted that the companies will be combining those platforms and working to build in more services, which were not detailed.

The two companies have similar but slightly different experiences in grid storage. AES Energy Solutions has built several large, utility-grade battery installations, but it's a smaller and younger company. Siemens has built small-scale battery systems for commercial and industrial use, but it's a huge company with business in 160 countries.

The shift to including more renewable energy on grids around the world, along with falling prices of high-capacity lithium-ion battery packs, has sparked a call for more utility-grade energy storage. With more intermittent solar and wind energy on the grid, batteries can offer utilities a way to harvest that energy and dispatch it when needed. Still, it’s a nascent industry that has only really found its footing in the last few years.

Tesla made the concept popular in the public imagination when it introduced its Powerpacks in 2015. That same year, a well at one of the largest natural gas storage facilities west of the Mississippi River—Aliso Canyon in Southern California—sprang a leak and had to be shut down. To deal with the natural gas shortage (and to assuage fears of future shortages), California regulators mandated that power companies start building a certain amount of battery storage in their grids.

That led to a deal with Tesla and AES (among others) to build large plots of batteries in Southern California. Tesla completed an 80MWh installation in January, and AES completed a 30MW, 120MWh battery system—currently the largest in the world—in February. Tesla this week announced a new project that could overtake the AES battery installation as largest in the world by the time it’s built in late 2017—a 100MW, 129MWh installation in South Australia.

AES and Siemens aren’t far behind in the batteries race. The companies say that together, they've "deployed or have been awarded 48 projects totaling 463 MW of battery-based energy storage across 13 countries.”

In a presentation on Tuesday morning, AES CEO Andres Gluski said one of the advantages of adding storage to the grid is that it can provide frequency control, an important issue in grid management. If energy from solar or wind slacks, electricity from batteries can be provided nearly instantaneously to make up for the lost power. “Energy storage can, in seconds, take in energy and inject energy such that the quality is as good as any,” Gluski said on Tuesday.

Siemens President of Energy Management Kevin Yates also spoke about the partnership today. Yates told the audience that batteries were necessary to meet a growing demand for a new kind of energy. “Our consumers aren’t just interested in reliable and affordable energy generation, they’re interested in a sustainable energy network… that can only be optimized [with] storage.”