Plus Power jolts US standalone storage market with $1.8bn multi-project financing deal
Transaction includes largest backing for a single project as banks see opportunity in fast-growth storage
Plus Power has completed $1.8bn in new financing for standalone battery storage totaling 1.04GW/2.76GWh in Arizona and Texas, including the largest such transaction for a single project, as lenders ramp capital deployment for a sector that will be key to enabling a cleaner, more resilient electric grid.
The transactions will support construction and operation of five projects: Sierra Estrella, 250MW/1GWh, and Superstition, 90MW/360MWh, in Arizona; and Rodeo Ranch, 300MW/600MWh, Ebony, 200MW/400MWh, and Anemoi, 200MW/400MWh, in Texas.
They will employ lithium-ion battery systems and provide energy and ancillary grid services such as regulation up-and-down, contingency reserve, and frequency response. Both Arizona and Texas experienced record high summer temperatures.
The main Texas grid, operated by ERCOT, was particularly under duress amid unprecedented peak demand, narrowly avoiding rolling blackouts on several occasions. Having more battery storage will also enable both systems to add more solar and wind energy.
“This capital will support the ongoing buildout of the largest and most diverse portfolio of standalone storage projects in the US,” said Josh Goldstein, CFO of Plus Power, which is based outside Houston. The said the scale highlights the company’s first-mover advantage in “bringing high-quality projects to market.”
Lead arrangers of the financing package included Bank of America, CoBank, Mizuho, Norddeutsche, Siemens Financial Services, Societe Generale, and US Bank.
The $707m financing for Sierra Estrella west of Phoenix, the largest for a US standalone storage project, includes $505m in construction and term loans and a letter of credit facility, and $202m of tax equity from Bank of America.
"We're proud to be supporting Plus Power on this breakthrough transaction by deliverying financing solutions that this industry needs to continue growing," said Omer Farooq, head of sustainable asset finance, at Bank of America.
Sierra Estrella and Superstition are scheduled to reach commercial operation by the second quarter 2024. Both projects have 20-year energy storage services agreements with Salt River Project, an electric power and water supplier.
In Texas, the Anemoi and Ebony projects will operate as merchant resources in the ERCOT wholesale market, according to Plus Power.
The company executed what it calls an “innovative hedge” for the commodities group of Goldman Sachs for a portion of Rodeo Ranch’s capacity but provided no detail.
The 2022 US climate law provided a federal tax credit for standalone storage worth as much as 50% of capital investment if certain eligibility criteria are met. Until then, an energy storage project could claim the investment tax credit (ITC) only when installed in connection with a new solar generation facility and had to be charged by it at least 75% of the time.
Now, with these requirements gone, projects can be more optimally sited, operate more efficiently, and capture additional revenue or savings.
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