Greenbacker Capital Management (GCM), a renewable energy asset manager, through an affiliated investment vehicle, has completed a $148 million tax equity financing commitment with RBC Community Investments. The commitment – one of the very first tax equity deals to utilize the solar production tax credit (PTC) – is helping finance one of the largest solar projects in GCM’s fleet.

To date, only a handful of solar PTC deals have been completed in the renewable energy industry. Although the PTC has been available for wind energy projects for decades, it wasn’t until the passage of the Inflation Reduction Act (IRA) that the tax credit was extended to solar power.

GCM has placed RBC Community Investments’ $148 million investment with the overall financing for GCM’s largest renewable energy project: the 240 MW DC Appaloosa Solar 1. The utility-scale solar plant broke ground last year in Iron County, Utah, where it generates revenue for the area, supports construction-related clean energy jobs and funds a scholarship for students who plan to remain local while pursuing their career goals.

The Greenbacker organization has a years-long track record of successfully executing on tax equity investments, bringing dozens of tax equity–financed renewables projects online and utilizing the federal investment tax credit (ITC) for its solar projects. However, this is its first deal involving the new solar PTC.

“Partnering with RBC Community Investments to complete one of the first ever solar PTC deals and finance our largest project to date is more than an important milestone for GCM, it’s an essential step forward for the energy transition,” says Charles Wheeler, president of GCM. “This is proof positive that the landmark IRA legislation is accelerating a clean energy future.”

Prior to the IRA, solar projects were only eligible for the ITC. Today, solar projects can choose between either the ITC or the PTC, which currently offers a 2.75 cents per kWh credit for electricity produced by solar energy and other renewables.

GCM was advised on the deal by Sheppard, Mullin, Richter & Hampton; Allen & Overy represented RBC Capital Markets.

Image by vwalakte on Freepik.

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Energy Vault, which is known for its gravity-based long-duration energy storage solution but offers battery storage and green hydrogen too, will incorporate Kore Power’s batteries into its grid-scale battery storage solutions.

“Energy Vault sought a strategic domestic battery manufacturing partner that would provide an advantage to our grid-scale energy storage solution customers,” said Marco Terruzzin, Chief Commercial & Product Officer, Energy Vault. “Our detailed diligence of KORE Power revealed they could offer a tier-one quality product at attractive unit economics that will be made in Arizona and therefore qualify for certain IRA incentives to benefit our customers.”

Energy Vault invested in Kore Power with a minority stake acquisition earlier this year while also this week announcing new project awards in the US and Southeast Asia in its second quarter results.

Kevin Keough, Senior Vice President of Corporate Development, Energy Vault said: “Our investment gains us significant time-to-market leverage as well as other important competitive advantages in the very large U.S. market segment for our energy storage solutions.”

Kore is considering expanding the future production capacity to 18GWh from its existing target of 12GW, and is exploring other US locations too. The firm has expanded downstream into integrate battery energy storage system (BESS) solutions with the acquisition of Northern Reliability last year.

Last week, mobile BESS provider Nomad, a company in which Kore holds a minority stake, secured a Department of Energy (DOE) grant to deploy its solution in rural Vermont. Kore itself is progressing with a US$850 million DOE loan for its gigafactory, receiving a conditional commitment in June.

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“The fund broadens our ability to sign tolling arrangements of various kinds with owners and operators of third party battery assets, including covering the collateral requirements associated with these contracts,” the company told Energy-Storage.news in response to a question asking specifically what the money would go towards.

The model de-risks the investment for the owner by guaranteeing a set income while allowing Gridmatic to capture more of the potential upside to the battery’s performance. It is different to a revenue-sharing model, where an optimiser and project owner share in the revenues of a project.

On the two models, the spokesperson added: “We offer both tolling agreements as well as revenue-sharing, depending on the needs of the client and their expectations for future returns from their battery asset. The fund supports us to backstop the tolling agreements and the guaranteed portion of a revenue-sharing agreement, if applicable.”

A ‘leading energy investor’ funded the first tranche totalling US$24.95 million, Gridmatic said. Gridmatic is already operating a 50MW/100MWh project using the fund.

‘By decoupling project development and active management of the batteries, this structure derisks the operational phase of a project for storage owners and supports the growth of the energy storage industry’, the announcement said.

“By participating in our fund, investors can capitalise on this volatility without the responsibility of managing an entire battery project or development platform,” VP business development David Miller added.

Energy-Storage.news has previously interviewed Miller in light of criticism from the developer community of AI-enabled optimisers’ perceived lack of transparency over their algorithms and trading decisions, a point to which Miller said “results will speak for themselves over time“.

A lot of battery storage projects in ERCOT are 9.9MW or under because of a faster interconnection processes that size, including a recent portfolio which secured tax equity financing this week.

“We are open to any size storage project, though in our experience the smaller projects are more commonly being aggregated in a portfolio for off-take contracting efficiency,” Gridmatic added.

“We currently operate a 50 MW system in ERCOT and are in negotiations to sign agreements with systems ranging from under 10 MW to over 100 MW.”

The ERCOT market for ancillary services is predicted to begin to saturate next year as the total installed battery storage capacity exceeds the MW of contracts available. This will necessitate a broadening of the revenue stack towards more energy-based activity like trading, which optimisers like Gridmatic say requires more sophisticated management enabled by AI in order to maintain competitiveness.

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Each will be integrated with a large-scale solar PV plant also bearing the name of their respective host counties.

The Grant County battery energy storage system (BESS) will be 100MW output, integrated with the 200MW Grant County Solar Project. The PV plant is currently under construction in the Grant County town of Potosi, and is expected to go into commercial operation in H1 2024.

Meanwhile Wood County’s BESS will be 75MW, integrated with the 150MW Wood County Solar Project that already went into operation in late 2022, in the town of Saratoga.

As reported by Energy-Storage.news in October 2022 when Alliant Energy revealed it was seeking the PSCW’s approvals, both BESS assets will be 4-hour duration, making Grant County 100MW/400MWh and Wood County 75MW/300MWh for a total of 175MW/700MWh.

Also reported at the time was that energy storage system integrator FlexGen was selected by the utility to work on the projects. Alliant confirmed yesterday that this is the case, with FlexGen to provide both energy management system (EMS), based on the company’s HybridOS operating platform, as well as battery storage hardware.

Alliant, which supplies both electricity and natural gas to retail customers, is targeting carbon neutrality across its electricity business by 2050. This commitment is part of the company’s ‘Clean Energy Vision’ which pledges to reduce greenhouse gas (GHG) emissions 50% relative to 2005 levels by 2030, and eliminate coal from its generation fleet by 2040.

Within that, the company has separate roadmaps – called Clean Energy Blueprints – for its activities in the two states in which it operates, Wisconsin and Iowa. In Wisconsin, that includes plans to build 1,100MW of new solar PV generation by 2024 across a total of 12 large-scale projects, on which it began development in 2020.

In Wisconsin as a whole, coal still accounts for the largest share of generation, although at least half of its coal fleet – running on fuel mostly brought in by train from Wyoming – of 5,300MW is scheduled for retirement by the end of 2024. Around 42% of net electricity generation in the state in 2021 came from coal, but this marked the continuation of a decline which meant coal fell below half of the generation mix for the first time in 2019, according to the US Energy Information Administration (EIA).

Meanwhile, the state’s largest share of renewable generation comes from biofuels. Other renewables resources including solar, wind and hydroelectric only accounting for about 10% of total generation, and solar only for about 10% of that. Other major sources of electric power include natural gas and nuclear.

Although the state is at an early stage in its adoption of solar – the first large-scale solar PV plants in Wisconsin were completed in 2020 – and at an even earlier stage in embracing energy storage, Energy-Storage.news has reported on a handful of large developments in the past couple of years.

February 2021: Utility holding company WEC Energy Group filed for approval of the state’s first solar-plus-storage project, Paris Solar-Battery Park in Kenosha County. PSCW approval was granted just over a year later for the 310MW PV plant, paired with 110MW of battery storage.

March 2021: The two WEC group subsidiaries behind that project submitted plans to buy electricity from another just a month later, Darrien Solar Energy Center, which would comprise 250MW of solar generation and 75MW of battery storage.

As with the Paris project, another utility, Madison Gas & Electric, would sign a power purchase agreement (PPA) for a smaller share of the output. Approval was granted for the utilities to buy power from the plant in late 2022.

April 2022: The PSCW approved Koshkonong Solar Energy Center, a project pairing 300MW of PV with a 165MW BESS, proposed by Invenergy, which is also the developer on the Paris project.

February 2023: Alliant Energy proposed a 99MW/396MWh BESS asset to be constructed at one of the utility’s coal plants which is scheduled for retirement in 2025.

March 2023: WEC’s subsidiaries WE Energies and WPS said they would once again partner with Madison Gas & Electric (MG&E), this time to buy output from Invenergy’s Koshkonong project.

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Xcel Energy is issuing one of northwest Wisconsin’s largest-ever calls for clean energy projects. The goal is to add significant carbon-free energy for the company’s Upper Midwest customers while replacing a coal-fired plant on the Minnesota-Wisconsin border.

Developers are invited to submit proposals for approximately 650 MW of new solar-specific projects or ones that combine solar with energy storage, such as batteries.

The request calls for projects located in Wisconsin with commercial operation dates from 2027 to 2029, helping to replace the capacity of the Allen S. King plant, a coal-fired plant in Oak Park Heights, Minn. that is scheduled to retire in 2028. Xcel Energy plans to reuse existing grid connections at the King plant site, allowing customers throughout the Upper Midwest to benefit from the new energy resources.

The 650 MW of new generation is enough electricity to power approximately 135,000 homes each year on average. Solar energy does not have any fuel costs and contributes to a diversified energy mix, which helps protect against rising fuel prices.

Under the company’s Upper Midwest Energy Plan, more than 80% of customers’ electricity in the region would be carbon-free by the end of the decade, with more than half coming from wind and solar. These projects will help move those plans forward. The plan calls for retiring all the company’s coal plants by 2030, dramatically increasing wind and solar energy, and ensuring reliable, affordable energy.

Xcel Energy has significant experience with new clean-energy generation. In April, the company broke ground on the Upper Midwest’s largest solar project near Becker, Minn., which will replace much of the generation from the first Sherco coal unit that is scheduled to retire later this year.

Xcel Energy is committed to a smooth transition for its employees at the King plant, who have played a vital role in powering the region for decades. The company has transitioned other coal plants without layoffs and expects to accomplish this again at the King facility. Xcel Energy is working with the state of Minnesota and local communities to explore potential future uses of the King plant site after its retirement in 2028.

Xcel Energy’s request welcomes a range of project types, development stages and sizes. More information about the request for proposals, including a detailed schedule and responses to all submitted questions will be periodically posted on the Xcel Energy website.

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Describing itself as an energy storage independent power producer (IPP), the company’s strategy has largely focused on finding regions with constrained grids ripe for the value proposition of battery energy storage system (BESS) assets.

Key Capture Energy (KCE) then owns and operates its projects, logging a handful of industry milestones such as bringing online the first grid-scale BESS in New York State. Now with a couple of hundred megawatts under construction, mostly in Texas’ ERCOT market and in New York’s NYISO service area, KCE also claims a development pipeline of more than 5,000MW it is pursuing in various US regions.

KCE was acquired by South Korea’s SK E&S, an energy-focused affiliate of the major conglomerate SK Group, in a deal which closed in late 2021. While financial terms were not disclosed, SK E&S, which prior to that had mostly been involved in the residential and commercial and industrial (C&I) sectors of the battery space, said prior to the takeover that it planned to invest more than a billion dollars into the developer-IPP.

“Dan Fitzgerald and I started with just a PowerPoint and an idea to build and operate utility-scale battery storage projects seven years ago, I’m very proud of what the Key Capture Energy team has accomplished, and I am excited about KCE’s future,” Jeff Bishop said yesterday.

“We have built a market-leading team and using our unique approach of starting with small projects, learning by doing, and applying those lessons learned, KCE is expanding and growing into markets across the country to continue leading the transition to the electric grid of the future.”

Jeff Bishop has also been a regular and much-valued contributor of comments, industry insight and anecdotes for Energy-Storage.news over the past few years.

SK E&S now begins the search for the CEO’s successor.

100MW ERCOT project completions

KCE also announced yesterday the completion of two of its projects in Texas, which brings the company’s operational portfolio in the state to 380MW.

As mentioned above in Jeff Bishop’s quote, the developer enters new markets with the buildout of smaller projects typically in the 5MW to 10MW range, executing, operating and learning from those before starting on progressively larger assets once the value proposition and technological design is proven.

In Texas’ ERCOT market, which has become one of the US’ two standout leaders for grid-scale storage – along with California – KCE started out with three projects of equal 9.9MW output, which went online in 2020.

It has since graduated to constructing projects in the range of 50MW to 100MW in ERCOT, while projects listed under its development pipeline highlights on the company’s website in Texas are all of 100MW.

Two of the company’s 50MW projects have recently gone into commercial operation, as announced by KCE yesterday, with Jeff Bishop commenting that they have gone into service in time for the expected August heat wave.

Heat waves create the need for both capacity and flexibility resources on the electric grid, as solar production ramps in the daytime, but extra load is added to the grid, largely from air conditioning units being cranked up.

The two projects, named TX 19 and TX 21, are in Texas’ Williams County near Austin. Bishop added that Key Capture Energy’s machine learning-driven automation and optimisation technologies would provide “provide peak battery storage performance and best possible value for ERCOT customers”.

In an interview with this site at the beginning of 2022, the CEO was vocal about the growing importance of the software side of the energy storage business. At that time, Bishop said Key Capture Energy had built up its market operations team and developed algorithms that updated KCE’s bids in the ERCOT wholesale market at five minute intervals.

“The software side is really exciting and will continue to be the major trend to watch in the years to come,” Bishop had said.

“From machine learning to artificial intelligence (AI), we have been part of the software growth for market optimisation; already we find our algorithms bidding into the wholesale market that are not overly intuitive, but when we start to dig into the rationale it is really the most optimal outcome for the electric grid and for our projects.”

See more of Energy-Storage.news’ coverage of Key Capture Energy.

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It saw a GAPP gross profit margin of 4.1% versus negative 2.2% in the same quarter last year. Fluence told Energy-Storage.news last year that under new CEO Julian Nebreda the company was “making a primary focus on profitable growth”, and it has been improving margins and reducing losses each quarter since.

Its net loss of US$35 million and adjusted EBITDA loss of US$26.2 million were around half of the prior year’s figures; US$60.8 million and US$52.7 million respectively.

The company increased its full-year guidance to US$2-2.1 billion of revenue having done the same in both its Q2 and Q1 results.

Perhaps in a sign of focusing less on getting as many projects as possible, the firm’s backlog edged up relatively slowly, at 3.5%, from US$2.8 billion at the end of Q2 to US$2.9 billion and the end of Q3 (30 June).

Fluence also revealed that it has secured an agreement to purchase US-made battery cells from AESC, which it said will make it one of the first companies to provide a storage product that qualifies for the Inflation Reduction Act’s domestic content 10% adder to the investment tax credit (ITC).

However, Energy-Storage.news notes that energy storage products may not need US-made cells to qualify based on the adder’s criteria.

The company also received a 400MWh contract that will utilise nickel-manganese-cobalt (NMC) batteries manufactured by European gigafactory company Northvolt, Fluence’s first major project to use European manufactured batteries. Fluence and Northvolt have previously announced plans to collaborate on energy storage system (ESS) manufacturing.

The company was founded by utility AES and electrics and engineering conglomerate Siemens, and remains majority-owned by the pair. It has continued to reduce the amount of revenue it gets from “related parties”, which was 51% in Q3 2022 but for Q3 2023 has fallen dramatically to 19%.

“We delivered a strong quarter of timely project execution,” said Julian Nebreda, the Company’s President and Chief Executive Officer. “Additionally, I am pleased with the job our team has done to strengthen our supply chains through our agreement to purchase US manufactured battery cells from AESC. We believe this agreement will enable both our shareholders and our customers to capture the benefits of the Inflation Reduction Act. Moreover, we successfully increased our pipeline by over $1 billion on a quarter-to-quarter basis, and we bolstered our Total Cash position by more than $30 million.”

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The project will combine a solar PV array with a battery energy storage system. The document said its expected net capacity during off-peak hours will be 200MWac and is not to exceed 230MW, measured at the delivery point. During peak hours, the project is expected to provide around 400MWh of energy from the BESS.

The DC/AC ratio of the PV needs to be optimised to provide a firm curve during sunny days, with more details on that curve provided at the RfP (request for proposals) stage.

Masen will enter into a 30-year power purchase agreement (PPA) with the project, while also acting as shareholder and land provider, the document, available here, said.

Morocco is aiming for a renewable energy mix of 52% by 2030, and this project is the third in a series of co-located solar and storage projects on the same land each titled Noor Midelt. Masen said the hybridisation was chosen “…in order to optimise the operating parameters of the plants by enabling supply of electricity after sunset while providing a low-cost solution for daytime generation.”

News reports say that Masen last week shortlisted six bidders for the preceding Noor Midelt II project. They are all large international independent power producer (IPPs): ACWA Power, Grupo Cobra, EDF Renouvelables, International Power, Iberdrola Renovables International and Enel Green Power.

There are also three operational projects called Noor I, II and III which combined concentrated solar power (CSP) arrays with energy storage (an example of CSP in Morocco pictured above).

Another major project in Morocco is a 10.5GW solar-plus-wind-plus-storage of which a large chunk of the offtake would be transported to the UK via subsea cables, being developed by Xlinks.

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Canadian Solar Inc. and independent power producer and service provider EDF Renewables North America have signed a multi-year module supply agreement to deliver up to 7 GW of high-efficiency N-type TOPCon solar modules to be produced at Canadian Solar’s new factory in Mesquite, Texas.

Under the agreement, Canadian Solar will be supplying its latest high efficiency N-Type TOPCon (tunnel oxide passivated contact) solar modules to support EDF Renewables’ project pipeline in the United States between 2024 and 2030. The TOPCon modules boast high conversion efficiencies of up to 22.5%; a low temperature coefficient of -0.30%/degrees C; low LID (light induced degradation) resulting in a low power degradation; and improved bifaciality over Mono-PERC modules, all culminating in increased energy production.

In July 2023, Canadian Solar announced it would invest over $250 million in a state-of-the-art solar photovoltaic module factory in Mesquite, Texas. Once fully ramped up, the factory would have an annual output of 5 GW and create approximately 1,500 skilled jobs. Production is expected to start in the fourth quarter of 2023.

“We are genuinely excited about our capacity to develop and build solar projects utilizing ‘Made-in-USA’ solar modules aligning with IRA guidelines,” says Tristan Grimbert, president and CEO of EDF Renewables North America. “This substantial commitment enhances our ability to minimize risks linked to trade uncertainties and supply chain fluctuations, ultimately propelling our projects toward successful realization.

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Standalone energy storage projects in the US only became eligible for tax equity financing this year, when the Inflation Reduction Act (IRA) extended the investment tax credit (ITC) to standalone storage.

The act also brought in several new provision to the ITC. Alongside its baseline coverage of a project’s capex of 30%, 10% uplifts to that are now available if the project has a minimum portion of US-made components as well as if it is located in an ‘Energy Community’, regions defined by historical reliance on fossil fuel industries.

SMT said the majority of the projects in the portfolio qualify for the higher ITC rate by being in an Energy Community.

It is not Greenprint’s first tax equity investment in standalone energy storage. In June, Energy-Storage.news reported on a US$10.8 million tax equity commitment it provided for a project by developer Nexus Renewables for a project in California. SMT described it as a specialised tax equity investor in its announcement.

However, tax equity investment has to-date largely been the domain of specialised tax equity investors because of the complicated investment structures that need to be created for it, limiting the pool of capital for renewables, as explained in a recent Energy-Storage.news interview with lawyer Mona Dajani of Shearman & Sterling, an expert in the topic.

Dajani talked Energy-Storage.news through new transferability and ‘direct pay’ provisions which aim to make it easier for investors with deep tax equity expertise to provide that type of financing for clean energy projects.

Projects in Texas, where ERCOT operates the grid, which are 9.9MW or under have a faster interconnection process. The announcement didn’t specify but most projects in ERCOT, particularly 9.9MW ones, have a two-hour duration, partially related to recent rule changes requiring a minimum charge of one hour at full power to participate in some ancillary services.

Our publisher Solar Media is hosting the 10th Solar and Storage Finance USA conference, 7-8 November 2023 at the New Yorker Hotel, New York. Topics ranging from the Inflation Reduction Act to optimising asset revenues, the financing landscape in 2023 and much more will be discussed. See the official site for more details.

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