Investment manager and renewable energy business Innova have agreed a debt facility of up to £40 million to support Innova’s growth in the UK solar and energy storage system (ESS) market.
The new debt facility will provide funding to support a “diverse range of projects, from those at an early stage of development through to those ready to build,” a Triple Point statement said.
Innova has more than 60 distribution network operators (DNO) and National Grid-connected sites under development in the UK that have a combined solar and storage capacity in excess of 24GW.
Steve Gordon, head of corporate at Triple Point, said: “We have a strong, long-standing relationship with Innova, and this significant deal represents an exceptional opportunity – supporting the acceleration of the energy transition industry and backing one of the UK’s leading operators.”
Daniel Mushin, investment director at Innova, added: “This facility with Triple Point represents an exciting milestone in Innova’s mission to help the UK meet its net zero targets by providing significant funding towards our accelerated growth in UK solar and ESS. We are delighted to continue our collaboration with Triple Point on this facility, and we look forward to seeing how our already long-standing relationship continues to develop for the future.”
First Citizens Bank’s energy finance business has served as lead agent on a $60 million financing for Gore Street Energy Storage Fund, which will be used for the development of a 200MW battery storage project located in Imperial County, California.
Gore Street's subsidiary, Big Rock ESS Assets, LLC, owns the 200MW / 400MWh California battery storage project, which will benefit from contracted revenue through the Resource Adequacy Program, a state initiative that incentivises the siting and construction of new resources needed for future grid reliability.
“The financing will support the remaining development of the project and provide Gore Street Energy Storage with additional liquidity for its growing portfolio,” a statement said.
Gore Street Energy Storage Fund is a publicly traded battery storage company that builds, owns and operates battery storage projects across the UK, Ireland, Germany and the US.
"We are pleased to work with First Citizens Bank to secure financing for the Big Rock project," said Alex O'Cinneide, CEO of Gore Street Capital, the investment manager of Gore Street Energy Storage Fund. "First Citizens is one of the leading lenders in the US battery energy storage sector, and we are impressed by their knowledge and efficiency in arranging financing for this large-scale energy storage project."
Mike Lorusso, head of First Citizens' energy group, said: "Big Rock's strategic location and use of commercially proven tier one technology makes it a valuable addition to Gore Street Energy Storage Fund's portfolio. We appreciated working with the company's highly experienced investment management team in structuring this unique financing to support completion of this attractive project."
Copenhagen Infrastructure Partners and US firm Tenaska have agreed to co-develop greenfield green hydrogen projects in the US.
The partners have committed to develop gigawatt-scale projects that can serve local and global green hydrogen, ammonia, methanol and sustainable aviation fuel markets. CIP is participating in the joint venture via its dedicated clean hydrogen vehicle Energy Transition Fund 1.
A lack of consensus on the optimal storage technology is acting as a 'barrier to growth' of the sector, here Tamarindo's Energy Storage Report identifies the storage technologies expected to substantially increase market share by the end of the decade
Lack of consensus on optimal storage technology is ‘barrier to growth’ of sector
Lithium-ion batteries & pumped hydro dominate, but new technologies emerging
Tamarindo’s Energy Storage Report identifies fastest-growing rival technologies
If there is one thing that unites the global energy storage industry, it’s the level of uncertainty about what type of storage technology will be the key driver of the energy transition. Indeed, some leaders of companies that are betting big on specific types of storage tech freely admit that our future is best served by a combination of many versions, be that lithium-ion, pumped-hydro, sodium-ion batteries or compressed air or gas, for example.
Yet, despite the view that a combination of different storage technologies will be necessary as economies target a drastic reduction in carbon emissions, the lack of clarity on the best technology could actually be deterring the wider deployment of energy storage. Indeed, a 2023 study conducted by DNV – which involved a survey of more than 400 senior energy professionals – concluded that the “lack of consensus on optimal technology” was one of the top five barriers to the growth of storage in the year ahead (see chart below).
(Source: DNV)
Lithium-ion batteries and pumped-hydro are the dominant types of storage at present. Pumped storage hydropower is the most widely deployed type of storage around the world – according to the International Energy Agency (IEA), the total installed capacity of pumped-storage hydropower stood at around 160 GW in 2021. Meanwhile, the IEA said global pumped storage hydropower capability was around 8,500 GWh in 2020, accounting for over 90 per cent of total global electricity storage.
How much lithium-ion battery storage is currently installed globally? Total installed grid-scale battery storage capacity stood at close to 28 GW at the end of 2022, according to the IEA and it is estimated that around 90 per cent of that total is lithium-ion battery storage, so approximately 25.2GW.
But, aside from pumped-hydro and lithium-ion which will be the fastest emerging storage technologies between now and 2030. Here Tamarindo’s Energy Storage Report gives you a run-down of the ones to watch:
1. Thermal energy storage
Thermal energy storage (TES) systems can potentially make use of different materials. TES is often classified in one of three categories: sensible (for example, water and rock), latent ( water/ice and salt hydrates); and thermo-chemical reactions (for example, chemical reactions and sorption processes, that is, a physical or chemical process where one substance becomes attached to another). Sensible storage involves the raising or lowering of a temperature, while latent storage occurs when the phase of a material is changed (solid to liquid or liquid to vapor, for example) without a change in temperature. In the case of a chemical reaction or a sorption process, which takes place on the surface of a material, heat can be either absorbed or released from the material. Major sources of thermal energy storage include heat pumps and heat generated by power plants and waste. The global thermal energy storage market was valued at $20.8 billion in 2020, and is projected to reach $51.3 billion by 2030, growing at a compound annual growth rate (CAGR) of 8.5% from 2021 to 2030. In recent developments, Australia-based MGA Thermal secured $8.25 million in funding to scale its long-duration energy storage system, which incorporates thermal blocks. Meanwhile, in April this year, Israeli thermal energy storage company Brenmiller Energy signed a non-binding term sheet with “one of the largest producers of clean energy in the world” and Green Enesys Group with a view to a definitive agreement to jointly identify, build, and accelerate electrification by using renewable energies and Brenmiller’s thermal energy storage system. Elsewhere, in July, the Spanish Government’s Ministry for Ecological Transition and the Demographic Challenge (MITECO) said that €180 million would be made available for thermal storage projects. In August this year, German thermal storage technology provider Kraftblock raised €20 million in a Series B financing round. New investors in the company included Shell Ventures, Finindus, Moore Strategic Ventures, A&G Energy Transition Tech Fund, TechEnergy Ventures, and Future Industry Ventures. A statement said Kraftblock’s thermal storage technology “time-shifts waste heat or renewable power to replace fossil fuels with green heat up to over 1,300°C (2,500°F)”.
2. Compressed air/gas
The global compressed air energy storage market was valued at $4 billion in 2021, and is projected to reach $31.8 billion by 2031, growing at a CAGR of 23.6% from 2022 to 2031. Recent developments in this market included Hydrostor entering into a binding agreement with mining project developer Perilya to leverage the existing mining assets at Perilya’s Potosi Mine in Broken Hill, Australia to support the construction of the Silver City Energy Storage (SCES) project. Meanwhile, in July this year, Corre Energy entered an exclusivity agreement – with Contour Energy LLC, a Texas-based energy storage developer - to acquire a 280MW compressed air energy storage project in the West Texas region of ERCOT comprising three pre-constructed salt caverns. Elsewhere, in April this year, the UK government’s Department for Energy Security and Net Zero awarded Cheesecake Energy £9.4 million in funding to test their FlexiTanker technology which stores electricity using a combination of thermal and compressed air energy storage. In addition, in November last year, it was revealed that Australian energy developers Sunshine Hydro and Energy Estate would develop up to 4.5GW of long-duration energy storage in Victoria – under the terms of their agreement, there were plans to explore the use of a range of technologies including compressed air storage. In October last year, UK compressed air energy storage company Innovatium UK was among 20 companies that were awarded a share of £8 million in funding from the UK Net Zero Technology Centre as part of its 2022 open innovation programme.
3. Lead batteries
The global lead-acid battery market was valued at $27.82 billion in 2022 and is estimated to reach a value of $47.8 billion by 2030. Advantages over rival technologies include safety and cost-effectiveness. Lead-acid batteries also have a long lifespan. Some studies have shown that, in some instances, the economics of lead-acid batteries stack up favourably when compared to lithium-ion batteries, though opinion is divided. Last month, it was announced that energy storage system manufacturer EnerSys had agreed a $91.8 million deal to supply its thin plate pure lead (TPPL) batteries to the United States Navy for use on nuclear submarines. Other leading market players include Exide Industries Limited, East Penn Manufacturing Company, Narada Asia Pacific, Amara Raja Batteries, and Leoch International Technology Limited. On the downside, many health and safety concerns have been raised in relation to lead acid batteries and their manufacture and transportation is subject to strict regulation.
Source: Vantage Market Research
4. Redox flow systems
A redox flow battery is an electrochemical energy storage device that converts chemical energy into electrical energy through reversible oxidation and reduction of working fluids. It has been forecast that the redox flow battery market will be valued at $2.8bn by 2034. By 2031, it is estimated that Asia Pacific will reach around 14.5 GWh of annual vanadium redox flow battery energy capacity, while North America is expected to reach 5.8 GWh and Western Europe is anticipated to reach 9.3 GWh. Recent developments saw Shanghai Electric Energy Storage Technology, the energy storage subsidiary of Shanghai Electric, raise RMB400 million ($54 million) in series A financing with a view to developing its energy storage business, which would include constructing 100Mbps stacks that can be used in megawatt container-type vanadium redox flow battery energy storage systems. Meanwhile, earlier this year Sumitomo Electric Industries reveal plans to expand its redox flow battery business in the US with an initial investment of about $7,600,000 to “prepare for a local production and installation system for redox flow batteries”. Elsewhere, in August this year, Munich-based energy storage system provider VoltStorage secured a €30 million venture debt loan from the European Investment Bank for the development and commercialisation of vanadium redox flow batteries for commercial and agricultural use. In another recent development, the US Defense Innovation Unit (DIU), in partnership with the US Air Force and US Navy, awarded a prototype contract for the use of CellCube’s megawatt-scale vanadium redox flow battery and management system, which will deploy “integrated hardware and software to connect and balance base energy systems hosted in collaboration with the Navy and Marine Corps”, a statement said.
The US Bureau of Ocean Energy Management (BOEM) has set out plans to lease four sites for offshore wind projects in the Gulf of Mexico.
BOEM secured bids for only one of three offshore wind seabed sites offered in a tender process that concluded in August 2023. It has now opened a 60-day consultation about leasing four more sites off the coast of Texas and Louisiana.
Total Energies has agreed to buy German renewables aggregator Quadra Energy from the Aloys Wobben Foundation, which owns turbine maker Enercon.
Quadra buys electricity from around 5,000 wind and solar plants totalling 9GW in Germany, and then sells the power on the wholesale market and directly to customers. The deal enables Total Energies to expand its presence in Germany.
Statkraft has bolstered its development activities in the Nordics by acquiring onshore wind developer Svevind and offshore specialist Njordr Offshore Wind.
The Norwegian utility has bought Svevind, which has a 16GW development pipeline, to strengthen its presence in Sweden; and has bought Njordr Offshore Wind, which is a joint venture between Njordr and Vindkraft Värmland, to access its 21GW pipeline or projects.
New York has given a boost to the US offshore wind sector by backing three gigawatt-scale projects totalling 4GW in its latest renewable energy solicitation.
The US state announced provisional off-take contracts for three offshore wind and 22 land-based renewables schemes, with total capacity of 6.4GW. The awards were made by the New York State Energy Research & Development Authority (NYSERDA).
The three offshore wind projects are:
Attentive Energy 1 (1.4GW) by TotalEnergies, Rise Light & Power and Corio Generation.
Community Offshore Wind (1.3GW) by RWE Offshore Renewables and National Grid Ventures.
Excelsior Wind (1.3GW) by Copenhagen Infrastructure Partners vehicle Vineyard Offshore.
New York has rejected calls from the developers of four offshore wind and 86 other renewables projects to boost PPA prices. This puts the US offshore wind industry in a perilous position ahead of our Financing Wind Offshore conference, but a new 4GW tender could offer a way forward.
New York has rejected calls from renewables firms to raise PPA prices
This includes four offshore wind projects with total capacity of 4.2GW
PPA-related uncertainty is now affecting 8GW of US offshore projects
Next month, A Word About Wind’s parent firm Tamarindo is set to hold the Financing Wind Offshore conference in Boston. This is set to provide an opportunity for experts in the US offshore wind industry to discuss the opportunities and risks in the sector.
Much of the discussion this year has focused on risks: rows about power purchase agreements, whale death conspiracy theories, undersubscribed tenders, and even objections from the military. We discussed some of these in this analysis last month.
However, regulators have been unsympathetic to these rising costs.
On 12th October, the New York Public Service Commission rejected pleas from the developers of four offshore wind farms – BP, Equinor, Eversource and Ørsted – and 86 onshore renewables schemes for higher subsidies. The offshore developers have argued that PPAs awarded at the projects between 2019 and 2021 no longer make financial sense because of inflation, rising interest rates and supply chain disruption. The quartet have argued for average price rises in their power purchase agreements (PPAs) of 50%.
The four projects are BP and Equinor’s 816MW Empire Wind 1, 1.3GW Empire Wind 2, and 1.2GW Beacon Wind; and Ørsted and Eversource’s 880MW Sunrise Wind.
The commission rejected pleas for higher PPAs at the projects because it said that raising the rates would not be in the best interests of the state’s energy users. It said that amending the PPAs for all 90 projects would raise energy bills for households by 6.7%, and for commercial and industrial users by around 10.5%.
Rory Christian, chair of the New York Public Service Commission, said raising these PPA prices after the competitive bidding process was impossible. He argued: “The Commission has repeatedly stated that competition in the procurement process is necessary to protect ratepayers and provides the soundest approach to mobilise the industry to achieve our critical State goals dependably and cost-effectively.”
We sympathise with his position. Regulators don’t want to create a precedent where they unilaterally change the level of financial support in a tender after the process is closed. Doing so would undermine the integrity of past and future tender rounds.
The problem is that this leaves the developers facing tough decisions. Do they try to find ways to re-work the projects in light of the new commercial realities? Ideally yes, but we would assume that they have already done this. They now face the choice to cancel PPAs and bid again; put their projects on hold; or walk away entirely.
Cancelling PPAs
The preferred solution for US offshore wind developers in a similar predicament has been to cancel the PPAs and re-submit.
This month, Iberdrola subsidiary Avangrid agreed with several Connecticut utilities to end the long-term PPAs at the 804MW Park City Wind project off the Massachusetts coast. It plans to bid again for PPAs for the project. The company has taken a similar approach at its 1.2GW Commonwealth Wind scheme, where it ended PPAs in July.
This appears to be the cleanest approach, but it is an inherently risky one too. There is no guarantee that these projects would win a tender for a second time, particularly when faced with competition from other developers in a similar situation.
Shell and Ocean Winds are also reportedly in discussions to end PPAs at the 2.4GW SouthCoast Wind project off the coast of Massachusetts; and Shell and EDF have said their 1.5GW Atlantic Shores 1 project is at risk without additional financial help.
These cancellations are not solely being led by offshore wind developers either. In August, utility Rhode Island Energy pulled out of a PPA at the 884MW Revolution Wind 2 project off the coast of Rhode Island and Connecticut as it was too costly. This leaves the 704MW Revolution Wind 1, which has PPAs from 2018 and 2019.
This means there are 8GW of offshore wind projects in US waters where developers are asking for help, and where we don’t yet see a resolution. Those with better news are 1.1GW Ocean Wind 1, which has been in question but where developer Ørsted has just given a $100m guarantee that the project will be online by December 2025; and the 2.6GW Coastal Virginia, which Dominion Energy said it on budget and due to be fully commissioned in 2026.
Overall, though, the US offshore wind industry is in a more perilous position than at any time since around 2015. The project pipeline is far bigger and projects are more advanced than back then, but developers need the confidence to take them to financial close. Otherwise, pioneering developments such as the 800MW Vineyard Wind 1, where turbine installation started this month, will look very lonely.
In New York, there is a sign of hope though. The New York State Energy Research & Development Authority has indicated it may hold an extra 4GW offshore wind tender so it can award support at higher levels for projects at risk of cancellation. It shows that NYSERDA is braced for project cancellations – although the fact that it is set to hold another tender with more lucrative PPAs will make cancellations more likely.
That renewed state commitment to offshore wind should give firms a sliver of hope.
Copenhagen Infrastructure Partners and Avangrid have secured a $1.2bn tax equity investment in their 800MW Vineyard Wind 1 offshore project in US waters.
The pair have secured the package from Bank of America, JP Morgan Chase and Wells Fargo. This is the largest single asset tax equity financing and the first for a utility-scale offshore wind projects.
Construction started on Vineyard Wind 1 in late 2021, and the project is due to be commissioned by mid-2024.
NHOA Energy has been selected as turnkey supplier for a 39MWh battery energy storage system in central Italy.
The project was a winner in the 2024 Capacity Market auction run by Terna, the Italian transmission system operator.
Located in central Italy, the system will be positioned within the perimeter of the existing combined cycle gas plant, enabling the connection of the battery storage system with the existing power plant, thus fully integrating into the plant’s control architecture while, at the same time, ensuring optimal performance and reliability.
The construction phase is expected to start by the end of 2023 while commercial operation is expected by December 2024.
Fabrizio Ciaccia, vice president EMEA of NHOA Energy, said: “This award, in the context of the 2024 Capacity Market auctions, is an important signal and opens the doors for the future projects that Italy will need to put in view of the EU 2030 decarbonization objectives. At NHOA Energy, our vision aligns with creating a more sustainable future and doing so partnering with esteemed energy players and with the help of Terna amplifies our mission, allowing us to collaborate and innovate, redefining the landscape of renewable energy solutions for generations to come.“
Technology and construction group STRABAG has made a €100 million equity investment in German battery and energy storage company CMBlu Energy.
“By joining forces with storage producer CMBlu Energy, STRABAG is planning to speed up the development of specific large energy storage projects through their support with construction and infrastructure”, a CMBlu Energy statement said.
CMBlu Energy has developed an ‘SolidFlow’ battery that combines the advantages of two technologies – redox flow batteries and solid state batteries. “The state power and capacity are independently scalable and energy density is high,” the statement said. “The technology is based on abundantly available, recyclable, and organic materials resulting in almost infinitely scalable energy storage systems that can be cost-effectively adapted to the respective application.”
Currently, CMBlu Energy, together with partners, is working on multiple pilot projects in Europe and the US to validate the large energy storage solutions. The company has projects in the Austrian state of Burgenland, in the US in Wisconsin and Arizona, and with the Uniper power plant Staudinger near Hanau, Germany.
CMBlu Energy said it does not use “conflict nor scarce materials” in its energy storage systems. Unlike lithium-ion batteries, the SolidFlow storage systems are “cost-effective, environmentally friendly, and secure,” the company added.
Dr. Peter Geigle, founder and CEO of CMBlu Energy, said: “The good and very open negotiations have shown that STRABAG and CMBlu Energy are highly complementary. As developers and producers, we can now invest into the construction and expansion of our production facilities. We will especially profit from the broad experience and execution power STRABAG has in large infrastructure projects.”
Klemens Haselsteiner, CEO at STRABAG, added: “The game changer for the energy transition are storage systems that make renewable energies available when needed. We are excited about this European innovative power. With our investment in CMBlu Energy, we are breaking new ground in the construction industry. In order to reach one of the most important goals in our company history – becoming climate-neutral by 2040 – we want to become a full-range supplier for energy services for our construction projects. Together, we will deliver large energy storage projects in a standardised construction design.”
A molten salts storage (MOSS) plant pilot is being built in Esbjerg, Denmark using Hyme Energy’s energy storage technology and Sulzer’s molten salt pump.
The MOSS plant will incorporate an energy storage system using the molten hydroxide salt commonly referred to as drain cleaner. This salt is comparatively less expensive and more accessible than molten salts used for energy storage to date. The pilot plant is expected to go operational in 2024.
“The thermal properties of molten hydroxide salt, which allow it to be heated to extremely high temperatures and stored for up to two weeks, make it an excellent medium for renewable energy storage,” a statement from Switzerland-based Sulzer said.
If successful, the pilot would ultimately be scaled to enable a storage capacity of 1GWh, which would mean the system could store the equivalent daily electricity consumption of 73,000 Swiss homes. At this capacity, the plant is projected to deliver annual CO2 savings of 32,000 tonnes per GWh of capacity. .
MOSS consortium members include Aalborg University, Alfa Laval Aalborg, DIN Forsyning, Energy Cluster Denmark, Hyme Energy, KIRT X THOMSEN, Seaborg and Sulzer. In addition to member contributions, the consortium project is funded in part by the Danish Energy Technology Development and Demonstration Program (EUDP).
Sulzer’s executive chairwoman Dr. Suzanne Thoma said: “MOSS has the potential to unlock stable renewable energy for future generations. Together with our partners, we are working to enable economies around the world to become more efficient and sustainable.”
CEO and co-founder of Hyme Energy, Ask Emil Løvschall-Jensen, said: “The energy storage facility in Esbjerg is a milestone for Hyme and a culmination of years of work to mature the technology. I'm proud that we can work with established industry players to demonstrate our technology. There is a lot of interest in our energy storage solution in the industrial and utility sectors, and it's critical that we get to market quickly. The world and the climate cannot wait.”
Macquarie Capital, the principal investing arm of Macquarie Group, has joined a US government initiative to improve energy efficiency, emissions and energy resilience across the healthcare sector by implementing on-site solar panels, microgrids, battery storage, backup generation with cleaner fuels, and EV charging for vehicle fleets.
Macquarie Capital has “committed to support up to $US300 million” in renewable energy project developments for hospitals and hospital systems.
Led by the White House Office of Clean Energy Innovation and Implementation in conjunction with the US Department of Health and Human Services, the initiative supports healthcare systems, investors and industry in leveraging grants and tax credits under the US Inflation Reduction Act (IRA) to finance and develop energy efficiency projects for critical healthcare hubs.
Healthcare facilities are increasingly seeking critical operational upgrades that improve the resiliency of their services while reducing their operating costs and emissions.
“As a developer of both energy and healthcare infrastructure, Macquarie Capital sees significant opportunity for projects in the safety-net healthcare space that can reduce energy costs and lower emissions while providing increased resiliency and attractive returns to investors,” said John Pickhaver, Macquarie Capital’s head of infrastructure & energy capital for the Americas. “Macquarie’s commitment to this program will expand our portfolio of development activities to benefit communities across the United States.”
Saudi Arabia's ACWA Power has agreed with three Dutch firms to explore the potential for a green hydrogen 'corridor' between its sites and the port of Amsterdam.
ACWA made the commitment with Zenith Energy Terminals, Gas Log and the Port of Amsterdam during a Saudi-EU Investment Forum in Riyadh on 23rd October. ACWA is involved in major green hydrogen complexes, including the $8.5bn NEOM Green Hydrogen Project in Saudi Arabia.
The European Union has announced 15 policies in its 'Wind Power Action Plan' to support profitability and growth in the European wind sector.
These 15 policies include measures to improve the design of renewable energy auctions to help developers; to unlock investments in new turbine factories; and to accelerate the permitting of new wind farms. The EU has also committed to expand installed wind capacity from 205GW in 2023 to 420GW in 2030.
Southeast Asia’s first "floating and stacked" energy storage system (ESS) has been deployed at Seatrium Floating Living Lab (FLL) and will commence operations in the first quarter of next year, a statement from Singapore’s Energy Market Authority said.
The floating ESS at Seatrium's FLL has a maximum storage capacity of 7.5 MWh and can meet the electricity needs of more than 600 four-room Housing & Development Board households for one day, in a single discharge. The Energy Market Authority said the ESS is integrated with “intelligent energy management” systems supported by artificial intelligence and machine learning algorithms to enhance operational efficiency and energy dispatch.
“The stacked ESS is a key component of an integrated floating energy solution that could help to overcome Singapore’s land constraints, with a deployment footprint of up to 40 per cent less than land-based ESS,” the statement added.
The project was awarded to a consortium led by Univers (formerly Envision Digital International Pte Ltd), which is part of a S$10 million partnership between the Energy Market Authority and Seatrium - announced in 2020 - to develop innovative energy solutions in the marine sector.
“The fast response nature of ESS also allows it to actively manage mismatches in electricity supply and demand, and helps regulate second-to-second fluctuations in the power grid,” the statement said.
Ngiam Shih Chun, chief executive of the Energy Market Authority, said: “Given Singapore’s limited land area, we need innovative solutions for our energy infrastructure such as Seatrium’s floating solution for energy storage. I thank our industry partners for their commitment in developing sustainable energy solutions.”
Chris Ong, CEO of Seatrium, added: "We are proud to be at the forefront of developing innovative energy solutions in the offshore, marine and energy industries. The deployment of Singapore's first floating and stacked ESS at Seatrium's FLL is testament to our commitment towards leveraging technology and innovation to optimise energy efficiency and reduce our operational footprint.”
Rio Tinto and Yindjibarndi Energy Corporation (YEC) have signed a memorandum of understanding (MOU) to explore opportunities to collaborate on renewable energy projects - including combined wind, solar and battery storage - on Yindjibarndi country in the Pilbara region of Western Australia.
The Yindjibarndi are an Aboriginal Australian community.
Rio Tinto and YEC will study and evaluate a range of opportunities, with the initial focus being on exploring the potential development of a solar power generation facility for the supply of energy to Rio Tinto.
Rio Tinto operates four gas-fired power stations in the Pilbara and about 600MW to 700MW of renewable generation is estimated to be required to displace the majority of gas use across its network. The company is currently assessing the development of approximately 300MW of solar projects.
YEC was established in June following an agreement between Yindjibarndi Aboriginal Corporation (YAC) and renewable energy developer ACEN Corporation (ACEN) to progress the development of major renewable energy projects on Yindjibarndi Ngurra (country) – an area covering approximately 13,000 square kilometres within the Yindjibarndi Native Title Determination Areas.
YEC’s initial plans include a Stage 1 target of 750MW of combined wind, solar, and battery storage with construction to commence within the next few years. The collaboration opportunities being considered by Rio Tinto and YEC relate to some of these Stage 1 projects.
YEC chief executive Michael Woodley said: “Yindjibarndi Ngurra is ideally suited to developing renewable energy generation and our people are encouraged by Rio Tinto’s interest in building this capacity with us. This will strengthen our existing partnership and provide long term benefits for our community, while also ensuring that we can protect and preserve the areas of cultural, spiritual and environmental significance within our Ngurra.”
ACEN International CEO Patrice Clausse said: "This MOU signifies more than just a partnership, it's a testament to the shared vision of sustainable energy development on Yindjibarndi Ngurra. It is the perfect blend of traditional significance and modern technology, designed to harness the limitless potential of the Pilbara's sun and wind, while respecting the deep-rooted connection of the Yindjibarndi people with their land.”
Rio Tinto Iron Ore chief executive Simon Trott said: “We are focused on repowering our Pilbara operations with renewable energy through the end of this decade and beyond by replacing gas and diesel with clean energy alternatives. The Pilbara is blessed with abundant year-round sunshine and strong winds at night, making it one of the most attractive places in the world to harness solar and wind power for energy generation. We’re excited to be deepening our partnership with the Yindjibarndi People through this agreement and look forward to working closely with them.”
A number of EPC contractors in the UK have ceased trading in recent months, with the result that energy storage deployment forecasts have been revised down
Storage EPC contractors struggling & construction sector insolvencies on the rise
One storage EPC contractor cites unsympathetic & “short-sighted” clients as the problem
EPC contractors’ plight has led to UK storage deployment forecasts being revised down
The UK construction industry is experiencing a torrid time at present and a slowdown in the deployment of energy storage projects is one of the side-effects. Data from the UK government’s Insolvency Service shows that 4,280 construction sector operators became insolvent in the 12 months to June 2023, a 16.5 per cent increase on the same period the previous year. Engineering, procurement and construction (EPC) contractors have not been immune to the economic turmoil facing the entire construction industry.
What is an EPC contractor?
An EPC contractor is a contractor that is party to an EPC contract, which sets out the terms and conditions for the design, engineering, materials and equipment procurement, and construction of a facility such as an energy storage system. An EPC contractor works under a single contract with a project owner, executing all project phases from start to finish. The EPC contractor is held accountable for capital project schedules, costs, and overall results, moving the risk from the project owner to the contractor.
However, with an EPC contractor assuming so much of the risk, if that contractor gets into financial trouble, entire projects can be placed in jeopardy. Unfortunately for the energy storage industry, the construction sector has always had one of the highest business failure rates. Statistics on US construction business failures – from the US Bureau of Labor Statistics – show that, of the 43,211 construction businesses that started in March 2011, only 37.6 per cent were still in operation 10 years later. Overextension – that is a construction company taking on a lot of work – is one of the primary reasons for business failures in the industry. Other reasons include low profit margins, slow collections, insufficient capital, onerous contracts, tight completion schedules, consequential damages, delay damages, high materials prices and a shortage of qualified and skilled workers.
High-profile EPC contractor liquidation
One of the most high-profile liquidations of a specialist energy storage EPC contractor occurred in July this year when news emerged about the winding up of Milton Keynes-based G2 Energy. More than 100 G2 Energy employees were made redundant. Prior to its liquidation, G2 energy had supported a wide range of engineering projects across the UK, including battery energy storage systems, renewable energy generation such as wind turbines and solar PV, and electric vehicle charging hubs. A total of 40 G2 Energy employees ended up joining facilities management and professional services company Mitie following the liquidation.
It is known that senior members of the G2 Energy management team were enraged by “unsympathetic clients/employers who used the contracts to drive G2 into this position rather than working with us – they were warned of our position but decided to just apply the contract conditions with very unreasonable payless notices, exacerbating the cashflow constraint that they caused.” There is a view that the fact clients took such an approach was short-sighted and self-defeating. One source close to G2 Energy said: “These clients now have their own problems with projects being delayed while they find alternative resources in a very constrained environment at a cost premium, rather than working with us during a very challenging trading period. The advice would be to ‘look after your contractors, before you lose them all’.”
A number of EPCs have ceased trading
While G2 Energy represents one of the more high-profile cases of an energy storage EPC contractor going out of business in recent months, it was not the only such company to find itself in financial trouble. As battery storage analysis platform provider Modo Energy highlighted last week, “in recent months, some EPCs have unfortunately ceased trading”. Modo Energy also stated that other EPCs had been forced to limit their services, due to difficult market conditions. “As a result, some battery owners have had to re-contract the completion of their projects,” Modo pointed out.
Struggling EPC contractors contributed to the slower than expected deployment of energy storage in the UK in Q3 2023. Modo Energy had predicted that 500MW of battery storage capacity would be built in Great Britain during Q3, but the actual buildout amounted to only 290MW, just over half of the expected total.
Source: Modo Energy
The general slowdown in recent buildout has prompted Modo Energy to revise its buildout projection curve down from 4GW by the end of 2023 to around 3.6GW, though it adds the caveat that if the current quarter mirrors the last, the figure will be lower.
Miami-headquartered battery energy storage developer Spearmint Energy has closed a $92 million Greenprint Capital Management tax equity investment in a 150 MW / 300 MWh battery energy storage project located in west Texas.
A Spearmint Energy statement said the investment in the project, called ‘Revolution’, represented “one of the first applications of the investment tax credit structure for a standalone battery energy storage system following the passing of the Inflation Reduction Act”.
Revolution reached mechanical completion this summer and is scheduled to begin operations later this year.
Andrew Waranch, founder, president, and CEO of Spearmint, said: “We are pleased to partner with Greenprint, well-recognized for providing capital to leading companies in renewable energy, as we embark on the final stages of testing at Revolution. As our nation continues to battle grid-instability due to climate change, fluctuating oil and natural gas prices, and an increase in electricity demand, Spearmint is acutely focused on partnering with best-in-class firms like Greenprint to ensure we can efficiently offer low-cost renewable energy to markets in need.”
Peter DeFazio, managing director of Greenprint, added: “Spearmint has proven itself as an innovative, strategic, and ahead-of-the-curve owner/operator of battery energy storage assets. We are proud to offer our financial support to the company at this pivotal point in the energy transition of our country following the positive changes brought about by the Inflation Reduction Act.”
Paul Hastings LLP and Leverage Law Group, LLC served as legal counsel to Spearmint and Greenprint, respectively. The Revolution project uses a battery system supplied by Sungrow USA Corporation and was constructed by the M.A. Mortenson Company.
The US Department of Energy has confirmed the allocation of $10.5 billion in funding for green hydrogen hubs, battery storage, grid infrastructure and local microgrids.
A total of $7 billion has been earmarked for the launch of seven Regional Clean Hydrogen Hubs (H2Hubs) across the nation and the acceleration of the commercial-scale deployment of low-cost, clean hydrogen.
Meanwhile, $3.46 billion has been allocated to a total of 58 projects across 44 states to strengthen electric grid resilience and reliability, as well as build microgrids and battery storage facilities.
The hydrogen hubs will be built in a number of locations including California, Appalachia and Texas. Other hubs will serve states such as Pennsylvania, New Jersey, Oregon and Washington.
Among the other projects being financed with the newly announced funding are battery storage facilities in Georgia, as well as microgrids in Louisiana and Michigan.
In addition, several projects aimed at expanding transmission across multiple states will also be funded. Examples include a Joint Targeted Interconnection Queue Transmission Study Process and Portfolio (JTIQ) (covering Iowa, Kansas, Nebraska, North Dakota, Minnesota, Missouri, and South Dakota).
To read more about the $7 billion for clean hydrogen hubs, click here
To read more about the $3.46 billion for the US electricity grid, click here
US residential solar and battery storage provider Sunnova Energy International has confirmed the pricing of its Hestia I securitization, which indirectly benefits from a partial guarantee provided by the US Department of Energy (DOE) Loan Programs Office (LPO).
Securitization processes involve the pooling of assets and the repackaging them into interest-bearing securities, that is, tradable financial assets.
The securitization consists of $219.6 million in indicatively rated AAA (sf)/AA+(sf) 5.75% notes and $24.4 million in indicatively rated BB (sf) 8.25% notes. The notes carry a weighted average life of approximately 5.01 years through the Anticipated Repayment Date in November of 2030 and will have a rated final maturity in December 2050. The notes are not directly guaranteed by DOE.
The notes are backed by a diverse portfolio of rooftop solar systems, battery storage systems, and combined rooftop plus storage systems distributed across more than 20 states and territories. The transaction is expected to close by November 8, 2023, subject to customary closing conditions.
William J. (John) Berger, founder and CEO of Sunnova, said: “Project Hestia stands as a testament to Sunnova and the DOE’s unwavering commitment to spearheading transformative initiatives that benefit customers, empower communities, and enhance the overall energy landscape in the United States. This successful pricing of Project Hestia’s first securitization showcases our continuing dedication to pioneering sustainable, reliable, and cost-effective energy solutions.”
Robert Lane, chief financial officer of Sunnova, commented: “With this securitization, Project Hestia has set remarkable benchmarks for both credit ratings and cost of capital within our sector. Hestia I achieved a weighted average spread of 197 basis points over the benchmark interest rate through the BB level. With the indirect benefit DOE partial loan guarantee, Sunnova has not only made history by issuing the first residential solar offering with an expected AAA rating for its senior tranche notes but has also, upon close, successfully attracted 20 new fixed income investors to our ABS channel.”
Innergex Renewable Energy has secured $322.7m tax equity from JP Morgan and Capital One for its 329.8MW Boswell Springs wind project in Wyoming.
The tax equity investors have made an up-front commitment to the project and also agreed to make cash payments as production tax credits are generated over ten years.
