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Enel Group has agreed to sell its 66% equity stake in its Romanian operations to Greek firm Public Power Corporation for €1.26bn. The deal is due to close in the third quarter of 2023.

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Nordex has reported a €244m loss for 2022 on revenue of €5.7bn, which is has attributed to economic volatility, supply chain issues and issues with product quality.

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Canadian energy storage system manufacturer Eguana Technologies has completed the acquisition of Australian storage and solar designer and installer Solarlab.

Alongside its commercial rooftop solar business, Solarlab is a preferred supplier of solar and storage solutions to Embedded Electricity Network operators in the multi-tenant residential market, including low rise apartments and retirement villages.  In these developments the utility serves the Embedded Network as a single microgrid customer and the Embedded Network operator manages onsite renewables and storage as well as individual customer billing. 

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Atlantic Green UK, a joint venture between Interland (25 per cent) and Nofar Energy (75 per cent) has acquired its third battery energy storage project, a 260MWh scheme at an unnamed location in the UK.

The new project adds to Atlantic Green UK’s other storage assets, Cellarhead (700 MWh) and Buxton (60 MWh).

Law firm Howard Kennedy advised Atlantic Green on the acquisition.

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·  Planned US storage capacity surpasses natural gas for first time

·  But concerns about interconnection queues jeopardise progress

·  Critics say Inflation Reduction Act does not address interconnection problem

In a sign that the energy transition is in full swing in the US, recent data from the Energy Information Administration (EIA) showed that 2023 will be the first year in which more battery storage capacity than natural gas-fired capacity will be developed.

Data from the EIA shows that developers have reported plans to develop 9.4GW of battery capacity in the US this year, compared to 7.5GW of natural gas-fired capacity.

It represents a significant turnaround in the last 12 months. The EIA’s early projections for last year showed that planned natural gas capacity additions in the US (9.6GW) would dwarf planned battery storage capacity (5.1GW) in 2022.

Storage will exceed wind deployment too

This year new battery storage capacity will not only exceed new natural gas capacity, but also new wind capacity in the US – the EIA estimates that developers will add 6GW of new utility scale wind capacity in the US in 2023. But its solar that will lead the way, with 29.1GW of new additions expected this year, representing 54 per cent of new electric generating capacity.

The EIA’s 2023 projections indicate that the Inflation Reduction Act (IRA) will have the desired effect and prove to be a significant boost for US energy storage. Among the act’s key provisions was the introduction of a 30 per cent investment tax credit (ITC) for standalone energy storage projects.

The storage tax credit appears to be having the desired effect. In what was claimed to be the first use of the ITC for standalone utility-scale battery energy storage, Eolian – a portfolio company of Global Infrastructure Partners – announced last month that it had successfully closed a “first-of-its-kind” tax equity investment in two standalone utility-scale battery storage projects located in Mission, Texas with a combined operating capacity of 200MW.

Optimism should be tempered

There’s no doubt that the IRA has filled investors with confidence about the prospects for energy storage market. The legislation is seen as providing a robust and long-term renewable energy policy framework in the US that has gone a long way to providing momentum for state-level community solar-storage programmes in particular. This was cited as the rationale behind the acquisition of 100 per cent of the equity interests in Amp US Primary Holdings, a US-based renewable energy generation and battery storage business, by a consortium comprising funds managed by Fiera Infrastructure – an affiliate of Fiera Capital – and Palisade Infrastructure Group last month.

But optimism should be tempered. The EIA data refers to battery storage capacity additions that are merely planned, the question is how much of this capacity will actually get developed. The uncomfortable truth is that interconnection queues in the US are scuppering many storage projects. Data from the Lawrence Berkeley National Laboratory, a US DOE Office of Science laboratory managed by the University of California, has shown that there is 427GW of storage capacity in interconnection queues in the US. The bad news is that the queues are only going to get longer – solar and battery storage accounted for 85% of new capacity entering the queues in 2021. 

IRA ‘ignores’ interconnection problem

This has been one of the criticisms levelled at the IRA – yes, it has provided a 30 per cent investment tax credit (ITC) for standalone energy storage projects, but clean tech executives are warning that the act is failing to address practical considerations such as interconnection. The fear is that the interconnection backlog will mean the US doesn’t hit its green targets.

Such is the backlog of interconnection requests that, last year, it was announced that PJM Interconnection, a regional transmission organisation operating in the eastern US, would not review new interconnection requests until 2026 because it needed time to clear its backlog of existing applications.

The fact is that such delays often result in project developers abandoning plans to build new storage capacity. According to the Lawrence Berkeley National Laboratory, only 23 per cent of all projects seeking connection during the period 2010 to 2016 “subsequently reached commercial operations”.

Speculative applications further clogging up system

Another issue is that local grids can become inundated and therefore unable to absorb more power. The result is that the costs can mount for developers in that, in addition to paying for a simple connecting line, they may also have to finance a wider scale grid upgrade to enable it to accommodate the new capacity.

This has resulted in a number of developers submitting multiple proposals for renewable energy projects while having no intention of building them all. They do this in the hope that one of the proposals will be granted a connection after a rival developer has paid for the necessary grid upgrades. These type of speculative applications have exacerbated interconnection queues.

Further dithering could prove costly

The Federal Energy Regulatory Commission (FERC) is attempting to rectify the problem. Last year it proposed interconnection reforms aimed at speeding up the process – they included implementing a “first-ready, first-served cluster study process”, which would mean transmission providers would conduct larger interconnection studies encompassing numerous proposed generating facilities, rather than separate studies for each individual facility. However, there are doubts about whether these proposals will be adopted amid talk of disagreement on the proposals among FERC’s four commissioners.

But time for dithering is fast running out. While interconnection problems persist, dreams of drastic reductions in US emissions will remain just that, dreams. Worse still, if renewables capacity is blocked, we could actually see emissions increase due to a resurgence in the use of existing coal and gas plants as the US seeks to meet shortfalls in energy supplies. The IRA has undoubtedly provided a solid platform for the further deployment of energy storage, but major obstacles remain.

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Voltalia has agreed a deal with the government of Brazilian state Rio Grande do Norte to look at developing green hydrogen production capacity in the Porto-Indústria Project, as well as the production of associated fuels.

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Oracle Power has teamed up with China Electric Power & Technology to develop, build and operate a major green hydrogen project in Pakistan's Sindh Province. The project includes the construction of 700MW of solar, 500MW of wind, and battery storage.

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Brazil's Omega Energia plans to establish itself in the Texas renewable energy market this year as it seeks to become a major player in the US.

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EDF Renewables has teamed up with Jan De Nul Group and EDF's Belgian subsidiary Luminus to bid in Belgium's 3.5GW Princess Elisabeth offshore wind tender.

Frédéric Belloy, EVP of international operations for EDF Renewables, said: "We are very pleased to partner up with Luminus and Jan De Nul in Belgium. As part of a global leader group in low carbon energy with a significant growth ambition in renewables and a more than 10-year experience in offshore wind, we’re very committed to offer a competitive bid on the upcoming Princess Elisabeth area and contribute to Belgium’s energy transition and development of a European offshore wind power industry."

Energy transition investor PASH Global and ERIH Holdings have signed an agreement to form a 50/50 joint venture to develop utility-scale solar and energy storage projects with a total of 100MW of cumulative capacity in Paraguay.

The first project will start production in 2024, and the remainder will be put on stream between 2024 and 2025.

“The projects will produce clean and reliable energy across Paraguay and lead to the creation of jobs in engineering, construction, and plant operations,” a PASH statement said.

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Martin Neubert, former chief commercial officer at Ørsted is joining Copenhagen Infrastructure Partners this summer as partner and group chief investment officer. CIP has raised €19bn in the last decade and is targeting €100bn by 2030.

Neubert said: "I have thought long and hard about my next career move and explored a number of different opportunities for CEO and other executive roles within the energy transition sector across North-West Europe. After careful considerations I have chosen to join CIP as the next right step for me."

Lenders increased confidence in the prospects for solar and energy storage in the US following the passing of the Inflation Reduction Act has meant Origis Energy has been able to agree an increase to its development finance facility that will double capacity to $750 million.

The new credit facility will support further expansion of Origis’ solar and energy storage project pipeline. This financing round follows a $375 million facility announced in May 2022.

Origis described the facility as the “largest announced this year for a utility scale solar and storage development project pipeline”. 

CIT, a division of First Citizens Bank, was the lead arranger. Leading lenders supporting the amendment and increasing their commitments included Santander, Deutsche Bank, HSBC, Rabobank, and Nomura. New entrants joining the syndicate include Truist Securities, Sumitomo Mitsui Banking Corp. (SMBC), KeyBank, Natixis and Société Générale.

Origis Energy is majority owned by funds managed by Antin Infrastructure Partners.

Latham and Watkins represented Origis Energy in the transaction. Norton Rose Fulbright acted as lender counsel.

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• US wind installations of 8.6GW in 2022 were just half the level they were in 2020
• This is despite support in the US Government's $369bn Inflation Reduction Act
• Developers face challenges with permitting, supply chains and grid queues

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Historic. Momentous. Transformational. We’ve all heard the superlative-laden spiel about the Biden administration’s $369bn Inflation Reduction Act. 

But the 2022 statistics tell a less positive story about US onshore wind. The American Clean Power Association has reported that onshore wind farms totalling 8.6GW were completed in the US in 2022. That is the lowest since 2018, a drop of 37% year-on-year, and around half of the record 16.6GW completed in 2020.

Annual onshore wind installations of 8.6GW is not disastrous. It’s broadly in line with installations most years since 2015, when the sector gained a five-year extension of the wind production tax credit (PTC) in the final months of Barack Obama’s second presidential term. That change led to the record-breaking 2020 because developers wanted to bring their projects online before the PTC window was due to shut forever. 

But that closure didn’t happen. The PTC was extended in 2019 and 2020 under the Trump administration, along with the solar investment tax credit (ITC), and support has continued under President Biden with the IRA. This support for renewables has been unprecedented in US history for both its length and the clarity it gives investors.

This has unlocked huge interest in new projects – and that is part of the problem.

Developers and investors are facing similar challenges as their peers in other parts of the world, including supply chain constraints and permitting delays. But those in the US are also facing challenges caused by lengthening interconnection queues, due to the major wave of development activity that policy support has unleashed.

Interconnection queues

In April 2022, the Lawrence Berkeley National Laboratory (LBNL) reported 1.4TW of wind, solar and transmission projects were in queues at the end of 2021 to gain grid connections across the US. The number of requests has increased year-on-year during the last decade as interest in renewable energy generation has grown.

That research showed that 676GW of solar, 427MW of energy storage, 170GW of onshore wind and 77GW of offshore wind projects were awaiting connections; and those queues will only have increased in 2022 because of the IRA. This has driven up average waits between connection requests to commercial operations from 2.1 years for projects built in 2000-2010 to 3.7 years for projects built in 2011-2021. It also shows how the growth of solar and storage are a challenge for wind projects.

We will only see that continue to grow unless there is reform of the system – and we are seeing approaches emerging that could help to alleviate these delays. 

From this month, PJM Interconnection is set to start introducing changes to how it deals with projects in grid queue in the 13 states it covers in the northeast US. The Federal Energy Regulatory Commission backed these changes in November, and they are intended to help PJM clear its 250GW project backlog by 2026.

One of its main policies is a ‘first-ready, first-served approach’ that will remove from consideration the speculative projects that are delaying the process. One problem in the current system is that only 23% of projects that entered interconnection queues from 2000 to 2016 went on to commercial operation, with 72% eventually withdrawn. 

In addition, the length of the timescales has encouraged developers to submit their projects early, and sometimes even before they have secured land for the project. PJM wants to focus its attention on the project most likely to proceed. It is also set to take a clustered approach, whereby it seeks to consider projects in clusters to help streamline its work. Other grid operators will no doubt be watching this closely.

Interconnection queues are just one part of the picture. Grid operators also need to build transmission links to boost grid capacity, including high-voltage cross-border links that have the added difficulty of dealing with more than one state. They could also benefit from additional data about the projects in their pipelines, to help them identify those with the most potential and others that are far too speculative.

Fixing US interconnection queues will require a combination of policy and technical solutions. This will not be a panacea for all the industry’s ills, but it will be a big help.

Italian oil giant Eni has signed a memorandum of understanding with Abu Dhabi National Oil Company to partner on renewable energy and low-carbon hydrogen projects.

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Renewable energy producer Qair Group has signed four power purchase agreements with Mauritius’ Central Electricity Board for energy from solar PV and battery storage and hybrid facilities.

This investment, worth more than $163 million, “represents the largest investment in the energy sector over the last fifteen years in the country, and one of the largest in the Indian Ocean”, according to Qair.

Totaling 60MWac, the projects will enter the construction phase this year to be commissioned in 2024.

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Aypa Power, a Blackstone portfolio company that develops, owns, and operates utility-scale energy storage projects, has acquired two standalone battery energy storage projects in the US state of Indiana from Blue Steel Power, LLC, a joint venture between Open Road Renewables and Eolian.

The 150MW Williams Power project is located in Jefferson County, Indiana and Fletcher Power is a 118MW late-stage project located in Decatur County, Indiana.

The standalone battery energy storage projects will provide capacity to the grid operated by Midcontinent Independent System Operator (MISO).

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Energy storage system supplier Sungrow has signed a contract to supply Israel-based Doral Renewable Energy Resources Group with “several hundred MWh” of energy storage with DC or AC coupled solutions.

The capacity will serve multiple projects and will be delivered between mid-2023 to the end of 2024. The projects are expected to be connected to the grid by the end of 2024.

Currently, approximately 10 per cent of Israel’s energy comes from renewable sources. The Israeli government is committed to producing 30 per cent of its electricity from renewable energy by 2030. Solar energy is expected to account for 26 per cent of this goal.

Doral Energy is one of the largest renewable energy developers in Israel, and its total pipeline in both Solar Storage I & II government tenders reaches over 1.4 GWh.

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The US Department of Energy (DOE) Loan Programs Office has entered into a “conditional commitment” for a $375 million loan to lithium-ion battery resource recovery and recycling company Li-Cycle.

The funding will be used to develop the “first commercial hydrometallurgical resource recovery facility in North America”, located near Rochester, New York, a Li-Cycle statement said.

The loan will have a term of up to 12 years from financial close, and interest on the loan will be the 10-year US Treasury Rates from the date of each advance for the loan.

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BHE Renewables, LLC, a Berkshire Hathaway Energy business, has selected Our Next Energy (ONE) as its large-scale battery storage partner for a $500 million solar energy microgrid-powered industrial site in Jackson County, West Virginia in the US.

Under the terms of the deal, ONE will build a new 'Aries Grid' factory on the site. The factory will bring an additional $22 million in investment to the project and generate 105 more jobs. Scheduled to open in 2025, the factory will build Aries Grid utility-scale battery storage systems using Michigan-made lithium iron phosphate (LFP) battery cells.

The new plant, which will operate under the Precision Castparts subsidiary Titanium Metals Corporation (TIMET), will employ approximately 200 people and expects to use 100 per cent renewable energy to manufacture titanium products for the aerospace and other industries.

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UK power company RWE has expanded its solar and energy storage capabilities by acquiring JBM Solar, a developer of solar and battery storage systems.

With the acquisition, RWE takes over a pipeline with a combined capacity of around 6.1GW (GWac), split into 3.8 GW of solar and 2.3 GW of battery storage projects.

Most of the projects are in the central and southern regions of England and a “large proportion” already have grid connections and land secured, according to RWE. A number of projects are ready for final investment decision and have secured the necessary planning approvals from the relevant authorities. This means that the first solar and battery storage projects could be operational as early as the end of 2024. It is expected that on average about 450 megawatts (MWac) per year will be commissioned.

London-headquartered JBM Solar, founded in 2012, has a team of around 30 professionals.

The UK is expected to see significant growth in solar and batteries, with the government targeting a five-fold increase in solar capacity over the next 13 years – from 14 GW today to 70 GW in 2035. The government also has ambitious goals for the expansion of battery storage: its capacity is expected to more than quadruple within four years – from 1.5 GW today to 6.5 GW in 2026.

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Power generation business Volvo Penta has announced it is expanding into the battery storage market with a storage system it claims can be scaled to “hundreds of megwatts” for use with solar and wind energy.

What Volvo Penta describes as its “high-performance subsystem” is based on Volvo Group’s electric vehicle technology.

“Battery energy storage is increasingly in demand for a variety of applications including utilities, factories, decentralized microgrids and mobile charging stations,” said Hannes Norrgren, president of Volvo Penta Industrial.

“As our solution is application agnostic, we see huge potential for its adoption. Together with OEMs, our solution provides possibilities to store energy from and add resiliency to renewable solar or wind-powered sources, opening new business models that appeal to end customers on their road to net-zero emissions.”

Battery energy storage system developer Available Power and Linxon – a SNC-Lavalin and Hitachi Energy joint venture – have announced a strategic partnership to “scale the North American energy storage market”.

A statement said: “Linxon has already secured access to the necessary equipment supply to deliver on the first tranche of Available Power's 1GW front-of-meter project pipeline in Texas's ERCOT market territory.”

As of December 2022, ERCOT had around 2.7 GW of installed battery capacity, meaning that Available Power's pipeline alone represents an approximate 37% increase with its 1 GW of new planned capacity.

An estimated 75% of the project pipeline comprises distribution-connected battery systems with an average size of 10 MW / 20 MWh each, “making the portfolio one of the largest-ever battery fleets announced by a developer”, the statement added.

Willkie Farr & Gallagher LLP served as legal advisor to Available Power in connection with the joint venture.

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Pulse Clean Energy has acquired 72MW of battery assets in Manchester, UK which will come online in 2024.

Pulse has already invested in nine diesel generation sites, which are being decommissioned and repurposed as battery storage assets.

Its first four sites are due to come online during Q1 2023, with more set to be converted throughout 2023.

Pulse Clean Energy is an investor, developer and holder of assets backed by IMCO, a Canadian pension fund with over $70b under management.

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Fund manager Infradebt has confirmed the first close of the Infradebt Energy Transition Fund (ETF), which is dedicated to financing grid scale battery projects in Australia.

Infradebt has not officially disclosed the size of the fund, but it is believed to be in the region of A$750 million to A$1 billion.

Initial investors include capital from Grok Ventures, the JANA Diversified Infrastructure Trust as well as a number of existing family office clients of Infradebt.

The fund will provide senior debt finance to six to eight battery projects with a total capacity of 1.5-2GW in the coming years.

The ETF’s first two investments are loans to the Neoen Capital Battery and Genex’s Bouldercombe battery energy storage system. The Neoen Capital Battery is a 100MW/200MWh battery project located on the outskirts of Canberra. Infradebt has provided a senior debt facility alongside the Clean Energy Finance Corporation. The Genex Bouldercombe storage system is a 50MW/100MWh project located approximately 20km southwest of Rockhampton in Queensland. Both projects are currently under construction and are expected to begin operations in 2023. Infradebt managed funds are the sole financer for the Bouldercombe BESS.

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