Construction is expected to begin on the project in 2025 at the Baltic Sea town of Paldiski on Estonia’s northwest coast. It will be Estonia’s first large-scale long-duration energy storage (LDES) facility.
It could also be notable for its use of underground PHES plant design and engineering that Zero Terrain has developed.
As reported by Energy-Storage.news in January 2023 as regulators gave their approval, the project, which Zero Terrain has dubbed Energiasalv, will utilise newly built underground reservoirs, pumping water back up into the adjoining Paldiski Bay to charge the system and then back through turbines into the subterranean reservoirs to discharge.
The company claimed it has come up with a “significant advancement” from traditional pumped hydro plant design that means PHES could be sited even on flat terrain, rather than necessitating overground slopes to drop water from an upper reservoir on a hill to a lower reservoir below.
Zero Terrain had said last year that it expected to get construction underway by this summer, which appears to have been put back a few months.
The Estonian state’s role includes helping secure capital and addressing potential market barriers to pumped hydro. The government has also pledged €1.98 million (US$2.14 million) from a state-run applied research programme to support it, while the project has also been deemed a project of European Common Interest (ECI) for the European Union (EU).
There is also another pumped hydro project in development in Estonia however, through government-owned integrated energy company Eesti Energia, which is a power generator and retailer, making it one of the world’s biggest shale oil to energy companies, in a country largely dependent on the fuel.
Eesti Energia said it was planning its own 225MW PHES plant back in 2022. It Is thought to be going through design, feasibility and impact studies now, and the company said it expected to start work in 2025-2026, if it goes ahead.
As a member of the EU, Estonia is seeking to align with the bloc’s renewable energy and emissions targets, while as a close neighbour to Russia, Estonia and other Baltic states are in the process of disconnecting from the Russian grid and harmonising with the European one.

In other pumped hydro news, the US National Renewable Energy Laboratory (NREL), has launched an open-source cost estimation tool for modelling potential PHES sites.
While the majority of new energy storage capacity being added to the grid today is electrochemical and almost without exception lithium-ion (Li-ion) battery-based within that, PHES still made up more than 95% of the US’ storage capacity as of 2022.
NREL pointed out that the last of the US PHES fleet was built in the 1970s, making it difficult to calculate what building the technology out would mean today economically.
“This tool allows potential project developers to get a ballpark figure for what a particular facility might cost,” NREL researcher Daniel Inman said.
“And a more realistic cost estimation would allow us to develop capacity expansion modeling results that are more realistic.”
NREL claimed that its new tool is also more detailed than a similar one developed by the Australian National University in 2017, including a wider range of system characteristics that can be fed in, and site-specific conditions such as local geologies and workforce availability could be inputted, among other things.
“Pumped storage hydropower is maybe the most promising energy storage solution we have to achieve the huge ramp-up needed to achieve a clean electricity sector,” Inman said, with the water-based mechanical storage tech potentially playing a complementary role in providing longer duration storage, versus batteries performing shorter duration applications.
The NREL cost model tool can be accessed from the laboratory’s website.

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It is the first time Calpine has officially announced the Nova project, with Energy-Storage.news reporting on it using various sources in January this year (Premium access), when White & Case announced a US$1 billion-plus financing round for it.
The 43-acre project is on the former site of Calpine’s Inland Empire legacy power plant, which it decommissioned in late 2022.
It didn’t reveal the capacity of the project but said that it could power 680,000 homes for four hours, implying it has a 4-hour duration, as the vast majority of California projects do. That would make it 2,720MWh, slightly smaller than the two largest operational BESS projects in the world, Moss Landing (3,000MWh) and Edwards & Sanborn (3,272MWh), both also in California.
It said that utilities Southern California Edison (SCE), Peninsula Clean Energy, and San Diego Gas & Electric will use the electricity from the project, presumably through Resource Adequacy, grid operator CAISO’s means of ensuring there is enough power to supply demand with a reserve margin.
Based on previous documents from the California Public Utilities Commission (CPUC), SCE will specifically contract for the 110MW coming online in fall.
Calpine Corporation operates natural gas and geothermal resources across the US with 78 plants. It already has a 80MW BESS in operation in California, called Santa Ana, and two under construction in addition to Nova: the 25MW West Ford Flat BESS and the 13MW Bear Canyon BESS. The company claims to have 2,000MW of BESS in development in total.

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The BESS unit, provided by Prime Batteries, will charge at peak production times and discharge when production tails off. The announcement claimed the batteries were produced locally.
Marcin Wasilewski, CEO of the European Institute of Innovation & Technology (EIT) InnoEnergy in Central and Eastern Europe, commented: “On a highly competitive Romanian market, Prime has managed to beat their competitors and win a major contract with their locally developed and manufactured solutions.
“I’m thrilled to observe their advancements! A perfect proof that European battery and ESS producers can successfully challenge their Asian and global competitors. A re-industrialised and energy-secure Europe is within reach!”
Prime Batteries CEO Vicentiu Ciobanu said the project would be increased to 216MWh in 2025. Ciobanu and other attendees claimed the project is in the top five largest hybrid plants of its kind in Europe, and when increased to 216MWh of storage capacity would be the largest.
The inauguration ceremony was attended by the ambassador of Sweden to Romania, Therese Hyden, as well as a representative from the the EIT.
Hyden said that Monsson Group is developing similar projects in Sweden in partnership with Swedish lithium-ion battery manufacturer Northvolt. The manufacturer is mainly targeting the EV market but does have a dedicated ESS assembly facility in Poland.
George-Madalin Chitaru, project manager for local contractor Emergy and also attending, said that it is the largest BESS in Europe built exclusively with equipment produced in the EU.
Romania was also in the news recently for reopening a competitive solicitation for large-scale BESS projects, seeking 240MW/480MWh of projects.

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The idea is that the projects will create long-term emissions reduction potential through technology innovations as well as creating economic value, with projects demonstrated, piloted or deployed within Alberta.
So far, this has seen the agency pay towards the capital cost of projects, including North America’s largest vanadium redox flow battery (VRFB), a 2.8MW/8.4MWh Invinity VS3 model flow battery system at the 21MWp Chappice Lake solar PV project.
That went online through developer Elemental Energy in September last year, while ERA is also funding Canada’s first commercial vanadium recovery project, another flow battery system at a solar PV plant using different electrolyte technology from Lockheed Martin, and early-stage pumped hydro energy storage (PHES) development, among others.
In its latest funding announcement made last week (28 March), ERA selected 13 projects through its Reshaping Energy Systems competition, which ran last year. ERA will fund between CA$500,000 and CA$6.5 million of each project’s value, with the portfolio adding up to a total value of CA$88 million in private and public investment.
These projects include large-scale battery energy storage systems (BESS), the hydro-plus-supercap combination, hydrogen fuelling stations, small modular nuclear reactors (SMNRs), technology to eliminate methane flaring off gas pipelines, energy use optimisation for oil and gas operations, cooling systems for overhead power transmission lines, distributed energy resource (DER) controls, and virtual power plants (VPPs).
Energy storage projects selected in Emissions Reduction Alberta competition
Energy storage-related projects to receive grants through the competition are as follows:
Atlas Power Technologies will get CA$6.5 million – the single largest sum of funding disbursed in the round – for its supercapacitor energy storage system to be deployed at an existing hydroelectric power plant operated by power generation and distribution company TransAlta. It is a first-of-its-kind project for North America, according to ERA.
The hybridisation will enable the system to deliver fast frequency response (FFR) ancillary services to the Alberta grid, responding in milliseconds to drops in frequency by delivering short bursts of high power. The grid operator, Alberta Electricity System Operator (AESO), is currently evaluting the rollout of a suite of frequency regulating market products, including FFR.
“As we increasingly rely on renewable energy, the scaling of technologies like Atlas Power’s supercapacitor energy storage systems become paramount for enhancing grid reliability and resilience,” said Sarah Goodman, president and CEO of the BC Centre for Innovation and Clean Energy, which supported Atlas in the development of its supercapacitor technology.
The grant goes towards the project’s total estimated cost of just over CA$14 million. TransAlta, which deployed Alberta’s first grid-scale battery storage system, made an application to regulators to get approval to deploy a BESS at one of its hydroelectric plants in 2022.
Receiving slightly less than that, at CA$6,449,326, is TERIC Power, which plans to deploy a 10MW BESS at an envirofuels facility owned by midstream oil and gas operator Keyera. The system, which TERIC Power has dubbed enhanced Load and Batteries (eLAB), will be designed to provide industrial backup power to the production site – thereby reducing its reliance on gensets – and grid services to AESO, which ERA claimed is another first-of-a-kind, this time for Alberta. Total estimated cost is CA$19.2 million.  
TERIC Power will also get just under CA$5.3 million for another battery storage project from the programme, this time for the pilot deployment of a standalone BESS, which will be connected to the distribution grid. Called the Fluiditi Battery Storage Project, it will be built in Alberta’s Saddle Hills and connect to existing distribution lines, providing applications including peak demand management as well as grid services, with a total estimated cost of CA$18.2 million.   
AltaLink, a regulated transmission provider owned by Berkshire Hathaway, will get CA$1.5 million towards the CA$3 million cost of evaluating how BESS technology could be used for the transmission grid. Such ‘storage-as-a-transmission’ (SATA) projects have been approved, and construction has begun, in Germany, Europe, in so-called ‘GridBoosters’ that will be owned by transmission companies and operated to increase the carrying capacity of their networks.
The ERA funding will support preliminary development studies.
Graph Energy will get just over CA$2.5 million for the validation and demonstration of graphene ultracapacitors that can be used to lower diesel fuel and natural gas consumption at generators used in remote locations.
The initial stage will see 30kW prototypes built, which can be scaled into much larger configurations and eventually megawatt-scale, with ERA providing around half of the project’s estimated CA$5 million cost.
Landmark Group of Companies will get CA$3.3 million towards the total CA$6.9 million cost of connecting 100 net zero energy solar homes to a virtual power plant (VPP) network. The UAE-based multinational conglomerate aims to integrate its VPP platform with the local grid operator’s distributed energy resource management system (DERMS) and utility billing and energy optimisation systems.

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At the time, KCE told this site that its new owner anticipated putting a billion dollars into growing and operating the developer. KCE owns and operates its projects in an independent power producer (IPP) model, with a portfolio of around 600MW of operating assets in Texas and New York and a development pipeline of 9,000MW spanning various US states, ISO and RTO markets.
You may have already read our exclusive ESN Premium interview with Brian Hayes, the new CEO of Key Capture Energy, which was published this week.
While it didn’t make the final edit of that feature-length interview, we also asked Hayes a few questions about KCE’s relationship with its owner and what it means for the developer.
“The relationship with SK has been very good so far. I’ve been here for three months; I speak with the SK counterparts, at least on a weekly, if not daily, basis, so we’re very much aligned,” Hayes said of the day-to-day running side.
SK Group has, Hayes noted, a “big focus” on energy transition industries, particularly in the US and the CEO claimed Key Capture is one of the new owner’s “best investments in the energy transition, and one they like a lot”.
“So, the involvement with SK is high and they have big expectations for us as we go forward. We’re doing everything we can to meet and exceed those expectations.”
As Hayes took over his role just three months ago in January, Kyungyeol Song, Chief Operating Officer of SK E&S subsidiary Passkey, Inc, said that since taking over KCE, Passkey has been “focused on becoming the most innovative battery energy storage company in the United States”.
Asked for his interpretation of that brief, the KCE CEO said that – as mentioned in the full interview – the developer’s building up of its in-house capabilities to access market opportunities via smart software was an aspect of the sort of smart technology innovation he believed SK was interested in.
“As far as linking the market opportunities and how we optimise everything, that is very much something that they had an interest in when they bought the company, and it’s something that we’ve pushed forward,” Hayes said.
“At the same time, what we’re trying to do here at Key Capture is [that] we want to be the reference in the industry. We want to do things the right way with our stakeholders, and whenever Key Capture says we’re going to deliver a project, we want everybody to know that we’re going to deliver the project on time. Then, we want to be the best operator with the highest safety.”
Hayes said that being a reference for the industry, by extension, includes being innovative and looking at the right technologies and business models, whether that be in terms of software, hardware, contracting structures, and so on.
SK having interests in a multitude of industries, including some directly relevant to Key Capture’s own suite of offerings was much preferable to what has happened with some of the developer’s rivals, the CEO said.
“We’re very fortunate to have SK as our parent because… compared to some others… a lot of others are owned by their backers, or financial institutions or funds.”
That said, when asked if KCE would be leveraging potential synergies with what SK does in its other group companies, Hayes said there are no plans to go in that direction.
To give an example from another Korean conglomerate, LG Energy Solution has got LG Energy Solution Vertech, an energy storage system integrator, under its wing, and that obviously has some interesting aspects to it. Obviously Vertech is an integrator and not a developer, but there’s a comparison that could be drawn to some extent.
“We don’t have any plans to get into building storage systems and doing all that and sourcing them from SK and all those types of things,” Hayes said.
“We’re very much focused on the traditional players within the energy storage space, the providers, and kind of working through that because they’re the ones that are doing the volume, and they’re proving to be the leaders.”
Ultimately, KCE’s success will benefit SK E&S’ bottom line, and while the parent company offers advice and thoughts, SK wants the developer to be independent, Hayes said.
‘Synergy advantage’ likely to influence Wärtsilä’s considered options
On a related theme of M&A activity, alongside our recent interview with Florian Mayr, partner at clean energy advisory Apricum, we asked the strategist about his thoughts on Wärtsilä’s ongoing strategic review of its energy storage and optimisation (ES&O) business.
Mayr, whose firm advises on everything from market entry to due diligence for M&A deals, agreed with the view of Danske Bank analyst Panu Laitinmäki, who said back in February that it was likely parent Wartsila Group didn’t want to see its margins diluted by carrying the energy storage business, even though Wartsila ES&O is now profitable and continues to grow.
“Wärtsilä, they are traditionally in the genset business, and then they bought Greensmith (the US integrator which became ES&O) years ago (in 2017),” Mayr said.
“I think what they’re seeing right now is despite the storage market booming, the margins you can achieve as an ESS integrator or whatever they would call themselves – I would see Wärtsilä ES&O as an integrator – they are lower than what they have in their other businesses.”
The advisor said it was probably similar to the case of NHOA, the Italy-headquartered system integrator which was bought out by Taiwan Cement Corporation (TCC) from ENGIE and rebranded to its new name from ENGIE EPS.
To bring that full circle back to the question we posed to Brian Hayes, one interesting aspect of TCC’s acquisition of NHOA was that TCC owns a battery cell manufacturing business in Taiwan. The deal to acquire the BESS integrator was touted at the time as bringing together the downstream smarts of the European company with the upstream technology capabilities of the Asian parent.
To be clear, Wärtsilä may not even sell off its energy storage arm yet, with company leadership stating that “all options” are being considered. That could include selling, bringing in new investment and retaining a stake, or perhaps some other kind of change.
Nonetheless, we put Mayr on the spot and asked what sort of new owner might be a suitable fit for a company like that.
“Anyone who can bring in already a synergy advantage and I think that’s obvious,” he said.
However, what may be less obvious is that synergy could be about cost – access to cheap components, whether cells, modules, power conversion system (PCS) or other parts – but also access to customers and presence in certain strategically important geographies.
According to the advisor, a deal like Wärtsilä-Greensmith may not even happen in today’s market because it appears to have been a case of wanting to get in early on an emerging market opportunity ahead of rivals.
Mayr noted that in Germany, Europe’s largest residential energy storage market, nearly all of the bigger providers that began life as independents that are now owned by entities including utilities and electronic component manufacturers, all of which offer that all-important “synergy”.
German market leader sonnen’s parent on the other hand, Shell, has put the storage company up for sale recently, which plays into the oil and gas company’s divesting of many of its B2C businesses, according to Florian Mayr.
So, some really interesting perspectives from Brian Hayes and Florian Mayr there on the changing face of the energy storage industry, as it becomes an ever-more mainstream value proposition.
Happy Friday!  
This week on ESN Premium
Key to success as an energy storage IPP is being a first mover, says new Key Capture Energy CEO
Read the full interview with Hayes here, in which he discusses his appointment, the company’s development pipeline, its business model, financing, variation in revenue streams across markets and strategic priorities.
‘Duke-CATL case won’t be unique’: BESS land grab to continue as curbs on China imports loom
Read our latest coverage of the ongoing ramp-up in global competition from China-based BESS providers and the – inextricably linked – drops in average market prices for the technology. Sources at the Energy Storage Summit USA last month discussed how this might tie into the potential of future additional controls on importing product from China.
Europe bets big on recycling in efforts to onshore battery supply chain
From another event, Benchmark Mineral Intelligence’s Giga Europe conference in Sweden, we caught up with companies in the battery recycling space. Investing in end-of-life and recycling solutions is a key part of the continent’s strategy to build up a local battery supply chain.

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No additional details were given in Elements Green’s announcement on business networking site LinkedIn, but a local planning document obtained by Energy-Storage.news clarified what the decision means, and a bit about the project.
The preliminary planning approval relates to changing local zoning and land use regulations to allow for the next stage of development, but is not the same as a permit for construction, which requires further development activity.
The project will be in Vorwerkshof, an area five minutes’ drive from the town centre, and would require around 18 hectares in total to house its 100 20-foot BESS container units and balance of plant (BOP) equipment.
The planning document also referred to 400MW being a ‘first phase’ of construction, and 100MW only requiring 1 hectare, so the project may well encompass future BESS capacity additions.
There are underground caverns at a nearby site, Huntorf, which currently store natural gas but could in future store green hydrogen, an opportunity that energy firm Uniper is pursuing. Energy-Storage.news has heard anecdotally that Germany is particularly bullish on the potential of green hydrogen, compared to other countries, potentially even for electricity storage (something most in the sector agree the tech has too low a round-trip efficiency for).
At 400MW it is among the largest BESS projects in Germany by power to-date, although no targeted commercial operation date (COD) was announced by the company. Other similar sized projects announced include several 300MW/600MWh systems by developer and engineering, procurement and construction (EPC) Eco Stor.
Germany is targeting 145GW of onshore and offshore wind and 215GW of solar PV capacity by 2030, which will require large-scale energy storage to integrate. The Federal government recently released an Electricity Storage Strategy detailing how it plans to get there.
Elements Green is active in the UK with large-scale solar projects covered by our sister site Solar Power Portal.

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The company has now set up offices in California (US), Frankfurt (Germany) and Australia to target the North America, EMEA and Asia-Pacific regions respectively, with a Singapore office covering the international operations at-large.
Hyperstrong buys battery cells and integrates them into a range of BESS solutions including DC and AC blocks along and building its own BESS components like containers, inverters and an energy management system (EMS) platform.
Like other companies from China, the firm’s latest generation BESS solution is a 5MWh 20-foot DC block offering 1-4 hour durations, and it claims 10GWh of orders from outside China already.
A source close to the firm said that its approach to the US market would be ‘flexible’ with the acknowledgement that the market already had established providers with expertise across the BESS supply chain, and that it would seek to partner. It could bring Hyperstrong’s engineering and supply chain expertise, which it can leverage to control costs, to ‘boost the market overall’.
Consultancy Clean Energy Associates’ VP market intelligence told Energy-Storage.news at the event that, considering the potential of countries like the US further curbing imports from China in future, “…whatever market relationships can be developed before that happens is very important.”
Hyperstrong was a sponsor and speaker at Solar Media’s Energy Storage Summit (ESS) USA 2024 last month.
Interestingly, a source told Energy-Storage.news that BESS buyers in China are much more focused on price, whereas in the US and Europe buyers place more emphasis on whole lifecycle, battery degradation and various other metrics alongside price. Fierce competition in China’s domestic energy storage market by BESS providers has been noted in the last few years.
Energy-Storage.news’ publisher Solar Media will host the 2nd Energy Storage Summit Asia, 9-10 July 2024 in Singapore. The event will help give clarity on this nascent, yet quickly growing market, bringing together a community of credible independent generators, policymakers, banks, funds, off-takers and technology providers. For more information, go to the website.

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At full manufacturing capacity, the new facility will produce 36GWh of cylindrical 46-Series batteries for electric vehicles (EVs) and 17GWh of pouch-type lithium iron phosphate (LFP) batteries for the ESS market, totalling a combined capacity of 53GWh.
The company claimed the ESS facility, called LG Energy Solution Arizona ESS, will be “one of the first ESS-exclusive battery production facilities in the world”. Full-scale recruitment will be begin in the second half of 2025.
Hyung Kim, head of the ESS battery division, commented: “There is no better place to build the source of our sustainable energy here in Arizona, where the abundant solar energy surrounds the region. Quality batteries, made right here in the Copper State, will reach every corner of America to provide power.”
Another executive at the division, Seungse Chang, spoke to Energy-Storage.news at the RE+ clean energy trade event in California in September last year about the company’s US market strategy (Premium).
Incentives under the Inflation Reduction Act (IRA) provide significant support for domestic clean energy technology manufacturing, via an array of tax credits.
These include the 45X tax credit, which pays per unit of product produced – US$35 per kWh for battery cells – another paying US$10 per kWh of battery modules produced, and a tax credit for upfront investment, the 48C. There is also a US$7,500 tax credit claimable by the end-user for EVs with batteries containing a minimum content of domestically-sourced components.
Similarly, on the downstream side, there is a 10% domestic content tax credit adder to the 48E tax credit for downstream energy storage project deployment, although delegates at Solar Media’s Energy Storage Summit (ESS) USA 2024 last month said clarity was still needed on how to benefit from it.
Our Next Energy eyes IRA-compliant cathode material via partnership
In related US upstream battery news, US gigafactory startup Our Next Energy (ONE) has signed a memorandum of understanding (MOU) with South Korean company L&F to explore the potential of producing cathode active materials (CAM) for batteries that comply with IRA incentives. CAM is used to create the battery cathode, a critical part of the battery cell.
The announcement said that L&F is exploring potential opportunities for future expansion to North America, while also exploring IRA-compliant materials for use in US-made battery cells.
It could therefore either look to manufacture CAM in the US itself, or continue to manufacture it in South Korea, using source metals and minerals sourced from select countries that the US has a free trade agreement (FTA) with. This, provided the materials meet a certain minimum content, would allow those batteries to qualify for the US$7,500 EV battery tax credit.
ONE plans to manufacture batteries for both EVs and ESS, and recently agreed to sell batteries to the ESS arm of General Electric.

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The scheme is operated by the DOE, the Department of Treasury (DOT) and the Internal Revenue Service (IRS), and the majority of funding has gone towards what the DOE calls “clean energy manufacturing and recycling” projects. This funding forms the first round of the initiative, with the DOT noting that it will issue a notice for the second round of allocations “in the coming months”.
While the department did not specify how much of the funding would go towards specific technologies, such as solar PV, it noted that projects receiving funding included clean hydrogen fuel cells, energy storage and grid infrastructure and electric vehicles.
Of the funding, US$800 million will go towards recycling, processing and refining of critical minerals, while US$500 million will be committed to industrial decarbonisation projects.
The DOE also noted that it received 250 applications from projects, requesting a total of US$13.5 billion in tax credits, with individual applicants seeking anywhere between US$1-100 million.
To read the full version of this story, visit PV Tech.

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The company has consistently gone out to the market seeking yet-untapped opportunities for large-scale BESS development, making it a first mover in markets like ERCOT in Texas, New York ISO and more recently MISO in the Midwest.
As well as its penchant for planting flags in rising RTO and ISO territories others have yet feared to tread in, the company’s profile has been raised by the often outspoken and candid views put forward by co-founder Jeff Bishop.
Bishop announced his intent to leave his post as CEO in August last year as the company brought online another 100MW in ERCOT, with the chief exec citing the need for a break after a relentless near-eight years at the helm.
In interviews with Energy-Storage.news, Bishop was forthright in discussing the ways in which Key Capture Energy (KCE) was innovating in the market, such as the development strategy, and building up his team’s software and asset optimisation capabilities in-house well ahead of many of its competitors.
Bishop’s commitment to assisting economic development in underserved regions of the US, as well as his advocacy for LGBTQ+ issues and diversity as one of the few openly gay CEOs in the energy industry, was also undoubtedly appreciated by many.
We put Brian Hayes, successor as well as long-time friend and former colleague of the outgoing CEO, on the spot to ask how Key Capture Energy plans to go forward and other dynamics of running the company and the wider market landscape.
ESN: It was known for a while that Jeff Bishop was leaving, and he told us that his successor was someone that he knew very well. You’re making something of a sideways move into the energy storage sector from renewables, but what led to you taking up the position as CEO?
Before I came here, I was at EDP Renewables for 18 years. For the last 12 years, I was on the executive committee reporting directly to the CEO. I had the opportunity to grow with EDPR from a very small company to what it is today, which is over 1,000 people, and about 500 people on my team.
Being in the renewable space for so long, [I was] seeing the impact the storage industry can have, and how much it’s needed for renewables. Putting those two things together was just a very exciting opportunity.
Solidifying that was the relationship with Jeff. I knew Jeff early on in his career, he’s done extremely well. When he went off to build Key Capture, he was way out in front as far as doing that and so I’ve kept in touch with him over the years. Then, of course, the formal process went along as well. It lined up very well.
Key Capture has a strong position in the Texas market, in ERCOT. It has also delivered some of the first grid-scale BESS projects in New York, a market that has so far been quite challenging. Then the most recent topic we discussed with Jeff Bishop was Michigan’s new energy storage target and how the company is developing projects there and in the broader MISO region. From a big-picture perspective, where are things today for KCE in terms of the development pipeline, which I understand totals around 9,000MW of assets at various stages?
One of the things that Jeff did a good job with, and I think is a key tenet of success, as far as being an IPP, or a storage developer, is really being a first mover.
Getting into those markets early, so you can get the development assets in the interconnection queue, so you can move things along, so you’re there when the market develops.
We’ve done that with New York ISO, we’re early entrants there, so we’re working on that to mature. We were early in Texas. We were early also in Michigan and South West Power Pool (SPP), so we have places where we have positions, where we’re getting ready and moving forward.
Really, the key is: how do we mature that pipeline and make sure we’re managing the pipeline in a positive way, so we can be ready when the opportunities come? The positive thing that we’re seeing is we do see more and more activity from the utilities, and others, as far as interest in storage. It looks like we’re making good bets, and we just need to continue to make those bets as we go forward.
Utilities, financiers ‘becoming more comfortable with storage’
For KCE, the business model has always been to own and operate its BESS assets. Will that continue to be the case?
To own and operate is a definite tenet that we have. We’re owned by SK, and so we count on them for financial support. But then there’s the owning and operating, but then there’s the financial side too. We will be very active in the financial space, as far as how we bring in capital and how we finance the projects as we go forward. I think that’s where we would have a diversity of players and a diversity of things, but as far as the assets themselves, we want to own them; we want to operate them as we go forward.
Could you tell us a little bit more about that finance piece then and the kind of the type of investors you might be looking for?
That’s the piece that we’re really looking at now, as we continue to mature and as the pipeline matures.
I talked about how the utilities and everybody’s getting more comfortable with storage, and there are more opportunities. It’s the same on the financing side.
As the industry matures, as contracting structures become more clear, and as revenue streams become better understood more easily by financiers, it makes it so that we can have more access to capital across the different types of finances.
Whether that’s debt, whether it’s banks, whether it’s preferred equity, the various different things. Those are the things that we’re focusing on now as to how we would line up the projects that we have, and then what’s the best way to either, firstly, go for a commercial strategy as far as a revenue contract? What’s the best way to do that?
Then following that up with: how does that marry up with potential investors that could be interested in projects? Those are the things that we’ll be looking at as we go forward. It’s an area that continues to develop and continues to mature. It’s something that we recognise as an area that, for us to be successful, and for the storage industry to be successful, we need to focus on and have good alignment.
The revenue streams for the different state-level markets, or ISO and RTO regions in the US can be varied: from CAISO in California where it’s about long-term contract structures, to ERCOT where it’s a very merchant play, to newer markets like New York where it is still a little undefined. How do you look at the business models and revenue streams available in say, ERCOT versus New York ISO?
The key really is that in every state, every ISO, the revenue model is a bit different. You can’t just assume the storage revenue profile is going to be similar across the country, and so it is unique; it requires lots of thought, lots of investigation, and understanding in the different markets to be able to figure out the best way to do that.
If you compare the differences, ERCOT, the piece around the merchant market, is very well developed. There are the ancillary services revenue streams that they have, there’s a regular energy arbitrage that you have. There are several different ways that are very clear as far as how the market will pay.
That makes it to where there’s a very good merchant opportunity if you’re willing to take that risk, and if you’re willing to play that market. That’s something that we’ve made the decision to do.
We have the operating megawatts in ERCOT, and we have a very strong market operations team that allows us to do that. That’s one thing where not all storage competitors have that same capability. I will compliment Jeff [on that], they were very much ahead as far as getting a strong market operations team to be able to interface with the market in ERCOT and understanding the best ways to dispatch the batteries as we go. That’s been a very positive thing.
That’s a story that we’re intending to replicate as we go around to the different markets where it makes sense because as you look forward, there’ll be some markets where it’ll make sense to just get a tolling agreement in place and that’s very straightforward.
Then there’ll be other markets like New York that has the Index Storage Credits, where there’s going to be a component of merchant and a component of a stable revenue stream. Those are the areas that we expect that we’ll be able to operate well in because we’ve gained a very strong skill set in ERCOT, as far as how to work in a market, and then we’ll be able to leverage that same skill set, of course, adjusting for the markets in different places.

Brian Hayes took over as CEO in January. Image: KCE
We should be able to cover the different types of contract structures. We can be flexible and be present where the opportunities come up. That links back to the development side, when you talk about markets, where we should be and all those types of things.
My view is that we need to be placing lots of bets, and we need to be across the country because there’s going to be different opportunities in different places, whether that’s for utilities, whether it’s for co-ops, or whether it’s potentially for commercial and industrial customers.
So as the markets mature, these opportunities will come. We need to be out there and go from there.
‘Placing bets’ across a balanced and diversified portfolio
Recently, Gore Street Capital, a UK-headquartered investor-developer, said that its diverse portfolio, with projects in the UK, Ireland, Texas, and Germany, was what enabled it to outperform some competitors that only focused on assets in the UK as that market went through a relatively low revenue period. Is it also part of the KCE playbook to not just capture the different opportunities, but also to spread risk across a diversified BESS portfolio?  
For sure. I’m a big believer in diversification. It’s not dissimilar from when I was at EDPR, we focused on markets all across the country. I think it’s a very prudent way for a renewable player or for a storage player in our case to move forward as far as to have diversification, because it’s the one thing that we do have to remember: the storage industry is new, and rules are still being defined, and regulations are still coming through.
Things can change. As a result, you want to have a balanced portfolio, so you can move around.
What do you think are going to be priorities for KCE and for the industry for this year?
For this year, the key focus areas are that we have two projects that are under construction that are coming online in the summer in Texas (KCE TX10 and KCE TX15). So, the priority is to get those projects delivered, and then just focus on execution.
I just came here, and so I have my own style, and my own ways of how I expect and want the company to work. So a lot of this year is really just getting all of our ducks in a row and focusing on execution and making sure that as a company, we’re all kind of working as one unit moving forward.

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