The Energy Storage Report 2024

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Cryptocurrency price collapse leads Texas bitcoin mine developer to target battery storage opportunity


Falling cryptocurrency prices have led to a crypto mine developer to propose a battery storage facility in the city of Corpus Christi, Texas.

Dallas-headquartered Bootstrap Energy has been developing a crypto mining facility to be built on a 114 acre tract of land in two phases, in an industrial district of the city. Each would have housed around 150 containers filled with rack mounted computers mining the digital currency bitcoin.

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However, Bootstrap instead wants to replace the proposed second phase with a large-scale battery energy storage system (BESS) facility.

The developer had received zoning approval for siting its crypto mine on the land in mid-2022, but with the proviso that it be allowed to consider and put forward plans for alternative industrial uses. The City Council of Corpus Christi last week (10 October) approved its “change of focus” at a meeting, as well as revised execution timelines.

Teaming up with Leyline Renewable Energy-backed battery storage developer Navitas Energy, Bootstrap said its BESS is expected to be connected to the ERCOT power grid and go into service “not later than the end of calendar year 2025”.  

The company has been “proceeding diligently” in preparation for its alternative plan, including filing an interconnection request with ERCOT, according to a letter sent to the council in August by Bootstrap Energy chief operating officer Matthew Held.

The developers expect the full interconnection study to be completed next month by utility AEP, which owns the existing substation to which the BESS would be connected.

Navitas bought a 50.1% stake in the BESS portion of the development in February and is currently designing the project to feature a 300MW battery storage system.

‘Crypto winter’ price collapse

Bootstrap Energy is going ahead with the initial 300MW of cryptocurrency mining, but said that factors including the high profile fall of the FTX crypto exchange had precipitated a dramatic reduction in demand for mining.

FTX’s collapse and subsequent jailing of CEO Sam Bankman-Fried came during what was already being referred to as a ‘crypto winter’ – a period when crypto prices become severely depressed, disrupting infrastructure investments in the sector.

Bootstrap noted in a presentation to the Corpus Christi council that when it signed an offtake deal in February 2022 for the first phase, the price of bitcoin (BTC) was US$44,000, but by September 2022, it had fallen to US$18,000. At that time, offtaker Computer North filed for Chapter 11 bankruptcy protection, and four months later FTX collapsed, bringing the BTC price down to just US$15,000.

Then, the customer for Phase 2 backed out of the project “just days before expected closing,” the company said.

The good news was that energy storage is seen as a new opportunity and Bootstrap Energy was approached by “numerous energy storage developers” before brokering the deal with Navitas Energy and becoming its joint developers.

In the first quarter of 2023, ERCOT accounted for 70% of all large-scale BESS deployments in the US. From around 3.3GW of batteries on the grid as of this summer, there are forecast to be 9.5GW connected by the end of 2024.

The two parties are both focused on Texas’ fast-growing market and developing numerous other BESS sites as well as some gas generation, all scheduled to be financed and constructed in a 2024-2026 timeline.

Bootstrap said the Phase 2 development would represent around a US$100 million investment and noted that the longer depreciation period for BESS versus crypto means capital equipment replenishment will be needed every 10 years as opposed to every five as originally proposed to the city.

It also pointed out the availability of “massive” investment tax credit (ITC) incentives available for energy storage developments, as introduced with the passing of the federal Inflation Reduction Act (IRA) in August last year.

Phase 1 will still go ahead as a bitcoin mine. Each of the two phases will be worth around an equal amount in payments to Corpus Christi’s general fund, an average of around US$1.6 million a year, Bootstrap said.

In April 2022, a bitcoin mining and services company, Blockstream Mining, began work on a proof of concept (POC) project to compute the currency using a 3.8MW solar PV array paired with 12MWh of Tesla Megapack BESS units. That POC is sited at an undisclosed US location, as reported by last year.

Our publisher Solar Media is hosting the 10th Solar and Storage Finance USA conference, 7-8 November 2023 at the New Yorker Hotel, New York. Topics ranging from the Inflation Reduction Act to optimising asset revenues, the financing landscape in 2023 and much more will be discussed. See the official site for more details.

22 October 2024
New York, USA
Returning for its 11th edition, Solar and Storage Finance USA Summit remains the annual event where decision-makers at the forefront of solar and storage projects across the United States and capital converge. Featuring the most active solar and storage transactors, join us for a packed two-days of deal-making, learning and networking.

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