Energy storage projects reach ‘investment-grade’ with esVolta’s $140 million debt facility

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esVolta, a developer of utility-scale battery energy storage projects, recently closed a $140 million senior secured credit facility to finance a 136 MW/480 MWh portfolio of eight storage projects in California.

It’s this type of institutional investing that’s going to drive the massive growth expected from the energy storage industry.

It’s not the next lithium-ion battery breakthrough that’s going to accelerate the energy storage industry. It’s not the next inflated promise from a flow battery startup, compressed-air scheme, solid-state battery research project or energy storage dream funded by Bill Gates.

It’s energy storage projects as investment-grade finance tools for institutional investors that will grow the energy storage market to $546 billion in annual revenue by 2035, as predicted by Lux Research, or grow the business tenfold from 2018 to 2023, rising to $5 billion annually, according to Wood Mackenzie.

One of the largest debt transactions in the energy storage market

CIT’s power and energy business led the financing round, along with Siemens Financial Services (SFS), CoBank, ACB, and KeyBanc Capital Markets.

These investor names can typically be found financing natural gas power plants and wind projects — so this entry into energy storage is a bit of a watershed moment.

Krish Koomar, CFO of esVolta said it was “one of the largest and most innovative debt transactions” in energy storage.

There was a wave of finance directed at energy storage a few years ago — more in the behind-the-meter realm than these projects. Stem, a provider of commercial energy storage systems, added $100 million in financing from energy investor Starwood Energy Group, Generate and Clean Feet Investors. Mainstream infrastructure investor Macquarie Group planned to put $200 million into a fleet of battery projects from Advanced Microgrid Solutions.

Since then, Stem and AMS have had to retrench and alter their business plans. Stem has recently signaled that it is up for sale.

“Institutional investors waking up”

Randolph Mann, president of esVolta was interviewed by pv magazine and noted, “We do think this is the largest and most significant funding for front-of-the-meter stand-alone energy storage.”

He added that the battery chemistry used in these projects is lithium iron phosphate (LiFePO4) — with batteries supplied by Powin Energy, a minority owner in the firm. Powin’s battery cells are supplied by CATL and used in a modular 140 kWh battery that scales from 125 kW to multiple megawatts.

Mann notes that these projects are “all stand-alone front-of -the-meter, not solar-plus-storage projects.” esVolta has long-term revenue contracts on all of the projects and has partnered with Southern Power Company on four of them. The capital will be used to help fund construction and operations of the projects.

Mann adds that they are “all grid-connected to the CAISO market” and are “long-term projects with investor-owned utilities won through competitive RFPs over the years.” He adds, “The market for stand-alone projects is much bigger and there will be more utility-scale projects.”

Mann said, “Institutional investors are waking up and ready to invest in storage. These projects are conducive to traditional project financing.”

The battery-based storage projects are engineered to deliver energy, capacity and ancillary services to the California power system. Here’s a list of esVolta’s projects.

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Some of the energy storage companies recently covered by pv magazine:

  • Yotta Energy’s distributed batteries mount under solar modules.
  • SolPad gave pv magazine an update on its distributed storage and solar product.
  • KiloVault’s 7.5-kW-hr wall-mount energy storage unit for residential and commercial applications is based on a lithium iron phosphate (LiFePO4) battery chemistry. The 7.5 kw-hr unit sells for $4,995 at the Alternative Energy Store and weighs 207 pounds.
  • Kore Power’s 110 kw-hr rack-mounted battery system is intended for front-of-the-meter, multi-megawatt application. The 18-employee company’s management has roots in mining as well as a partnership with DFD.
  • NeoVolta’s 24 kw-hr residential storage entry, according to the CEO, has met the Tesla price, while giving better performance — he quoted the company’s 8.4 kW unit at $18,500 fully installed.
  • Panasonic’s residential energy storage systems are available in an AC-coupled and a DC-coupled version.