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UK investor joins US energy storage developer to compete with gas peakers

Building on its background developing renewables and natural gas-fired power plants, Chicago-headquartered Hecate Energy joined with London-based investment firm InfraRed Capital Partners to launch a new energy storage joint venture called Hecate Grid LLC that could compete with gas peaker projects in North America.

"Energy storage is somewhat of a panacea we've been looking for," Gabriel Wapner, Hecate Energy's director of development, said in an interview after the companies announced their venture Oct. 16. "It allows us to firm and shift energy, potentially replacing peaking capacity. When we look at peakers on the grid today and see how little they are used, we see storage can serve the role of the peaker while adding value and use."

Hecate Grid will develop, build, own and operate utility-scale energy storage facilities in the U.S. and Canada seeded with an initial portfolio of 126 MWh of operating and contracted storage projects developed by Hecate Energy and another 600 MWh of projects under development.

"We believe the time is now to invest in the North American energy storage markets," Thomas Buss, investment director and transaction lead for InfraRed, said in a news release. While the companies did not disclose the terms of their agreement, InfraRed Capital, which manages more than $10 billion in equity capital, will own a controlling interest in Hecate Grid, Wapner said.

The company is eyeing projects across the continent but already has a head start in two key markets: California and Ontario. In California, Hecate Energy has 10-year contracts with Edison International subsidiary Southern California Edison Co. for the 10-MW Hecate Energy Johanna 1 Battery Storage and 5-MW Hecate Energy Johanna 2 Battery Storage arrays. It also has three operating battery storage facilities in Ontario, combining for nearly 15 MW, and another 30-MW project under development.

"We are very interested in deregulated markets," Wapner said. "Storage is a tremendous asset in load pockets and high-priced nodes on the grid." While the energy storage market remains "in an early stage of evolution," it is growing quickly, he added. Wood Mackenzie Power & Renewables analysts expect U.S. energy storage additions to jump to 393 MW in 2018 from 215 MW in 2017. The research firm, formerly known as GTM Research, has identified a nearly 10,000-MW "peaker displacement opportunity" for energy storage in the U.S. over the next decade.

While Hecate Energy is developing large-scale solar, wind and gas projects, the joint venture will focus primarily on stand-alone storage projects, Wapner said, adding that the investment from InfraRed will help Hecate Grid deliver "hundreds of megawatts in the next several years."