Dealwatch: BlackRock, KKR & Carlyle go big on storage

• UK viewed as European market offering most potential for investors
  
• Need to decarbonise heavy industry in India creating opportunities
  
• Community solar projects in the US piquing investors’ interest

Some of the biggest asset management firms in the world have recently made some notable acquisitions in the energy storage sector. BlackRock, KKR and Carlyle are among the heavy-hitters who have added storage assets to their portfolio. The deals have highlighted the broad appeal of all types of storage, whether that be massive industrial assets or smaller community-based storage portfolios.

Asset managers are increasingly looking to back companies in the distributed generation sector amid signs that smaller scale solar-storage projects are set to proliferate. Meanwhile, though substantial investments in US and UK storage are common, there is also a recognition that there are emerging markets with huge potential. Take the example of India – investors’ confidence in the country’s renewables market is growing and there is a recognition that much needs to be done to decarbonise the heavy industries that operate there.

There is huge also potential in the UK storage market and money is flooding into the sector, with investors from the Middle East among the latest to have taken a stake in the industry.

BlackRock eyeing maturing storage market

Two weeks ago it was confirmed that BlackRock had agreed a deal to acquire Jupiter Power, the US operator and developer of standalone utility scale battery energy storage systems. Jupiter’s team includes 70 professionals with more than 25GW of prior power generation project experience. The company has seen itself as one of the pioneers of storage in the US with a pipeline of 11GW that is spread from “California to Maine”.

Jupiter Power CEO Andy Bowman said the deal represented a significant milestone for the US storage sector. “Acquisition of Jupiter’s uniquely capable energy storage platform by BlackRock’s diversified infrastructure business is another sign that energy storage is maturing into an important new player in the electricity business with a critical role to play,” he said.

KKR convinced of Indian government’s commitment

BlackRock’s acquisition of Jupiter came shortly after fellow asset management giant KKR confirmed it will invest $400 million in India-headquartered Serentica Renewables, which has a “medium-term goal” of installing 5GW of carbon-free generation capacity - coupled with storage technologies - to supply over 16 billion units of clean energy annually and displace 20 million tonnes of CO2 emissions. Serentica is currently in the process of developing around 1.5GW of solar and wind power projects across various states including Karnataka, Rajasthan, and Maharashtra.

KKR was persuaded to make the investment after becoming convinced of the Indian government’s determination to accelerate the energy transition in the country. Indeed, Serentica highlighted how it has been able to build momentum given the “favourable macroeconomic tailwinds behind India’s power and renewables sectors”.

The opportunity in India is indeed considerable. This is because the country’s economic development is being driven by industries that are energy intensive and, as a result, decarbonising these sectors represents a major challenge but also a significant opportunity.

Hardik Shah, partner at KKR, said, “Our investment in Serentica reflects KKR’s confidence in India’s renewables sector and our commitment to advancing the energy transition in India. Energy-intensive, heavy-industry companies play an important role in society but have traditionally faced more challenges in meeting energy needs sustainably.” 

Carlyle backing community solar and storage

Elsewhere, it was announced last month that funds managed by Carlyle had invested $350 million in Aspen Power Partners, with the proceeds set to be invested in the community, multifamily, and commercial & industrial solar and storage markets. Carlyle recognises that there are significant growth opportunities not only in the utility scale renewables sector, but also in community solar and distributed generation in general.

J.B. Oldenburg, managing director on the renewable and sustainable energy team at Carlyle, said: “Our investment in Aspen is a commitment to accelerating the widespread accessibility and availability of solar and storage, which we believe is accretive to our portfolio by supporting this decade’s ambitious renewable energy and climate change targets.”

Meanwhile, back in October, renewable energy company Masdar – which is part of the Mubadala Investment Company – acquired UK battery storage developer Arlington Energy. It’s Masdar’s view that countries need to increase their investment in energy storage if their net-zero goals are to be achieved. Masdar also considers storage a vital component in its drive to expand its own offshore wind and wider renewables portfolios. “By working together [with Arlington Energy], we will be able to provide a more resilient and flexible energy resource, helping to accelerate the UK and other European countries’ clean energy transitions,” Mohamed Jameel Al Ramahi, CEO of Masdar, said.

More asset managers set to invest in storage?

In October, alternative asset manager Wafra acquired a controlling interest in US-based Mission Clean Energy LLC, a developer of solar and battery storage projects with a 3GW project pipeline. Alongside Wafra, Aggregate Power Infrastructure (API), a clean infrastructure investor, will be investing in Mission.

Wafra views the US solar and battery infrastructure sector as a significant market opportunity. Edward Tsai, managing director at Wafra, said: “The team at Mission Clean Energy has an impressive track record of delivering high quality renewable energy projects, rooted in a disciplined approach to market entry, site selection, and project development.”

Energy storage assets are a hot ticket among investors at present, and given that some of the world’s leading asset management firms have concluded deals in recent weeks, others are sure to follow. The UK market, given its maturity, is currently viewed as offering the best investments in Europe, while the US solar-storage sector also has huge potential – however, it’s also worth keeping an eye on emerging markets, such as India, where there is considerable government commitment to the energy transition.

IMAGE (left to right): Andy Bowman (Jupiter Power), J.B. Oldenburg (Carlyle), and Hardik Shah (KKR)