The Energy Storage Report 2024

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GSP selling 2GW ERCOT pipeline for 2025/26 COD including 500MW Houston project


The co-founder of new US developer Granite Source Power (GSP) discussed its for-sale 2GW ERCOT BESS pipeline including a large, 500MW project near Houston, and why it entered the market.

The company was founded last year by a group of executives from Enel Green Power North America, part of the large Italian-based utility, including partner and co-founder Jessica Shor who explained why.

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“We set up GSP because we found a lot of development shops that previously sold projects were either holding onto projects to build and operate themselves or sell as part of a platform transaction. We expect to sell project by project, although obviously prefer repeat business,” Shor said.

The firm sells its battery energy storage system (BESS) projects at ‘development complete’ which means interconnection agreements have been executed, environmental studies completed and all permitting is done, among other activities, and is selling a 2GW pipeline in the ERCOT, Texas market.

“We’re in the middle of a sales process in ERCOT being run by Marathon Capital for five projects. Those will sell slightly earlier than development complete given the long lead time for battery supply. We expect these projects to hit COD (commercial operation date) between May 2025 and May 2026,” Shor said.

“The smallest of those five is 150MW and the largest is 500MW, in the Houston area where we found a really large and robust substation. We’re confident that you can go that large at that particular site.”

Virtually all ERCOT BESS storage projects are at least two-hour duration systems meaning a potential 1GWh-plus energy storage capacity for that larger project.

“We’re mainly working in ERCOT right now and have a pipeline of 2,500MW, clustered around Houston and the Rio Grande Valley, as well as the Permian Basin in West Texas. Each has different siting theses. Rio Grande for example has a very weak 138kV transmission line, a growing load and growing renewable penetration.”

GSP recently secured a US$40 million equity capital commitment from New Energy Capital, which will go to originating projects, developing its siting platform – which Shor described as ‘industry-leading’ – and general corporate spend.

“We think we have an industry-leading siting platform, which is GIS-based (Geographic Information System). We feed lots of data, both purchased and internally developed, into GIS, mapping all spatially-driven revenue and cost drivers. It takes a really quantitative view towards siting.” then asked Shor about the inherent risks of early-stage projects and the possibility that projects don’t make it to COD. The topic has come up in recently when talking to other ERCOT developers and, more recently, those entering the blooming Italian market.

“Obviously not all projects become reality. Some things are unforeseeable and some risks ultimately can’t be mitigated. That’s just the reality of development. Something like 20% of interconnection filings ultimately get built. But, we do a lot of homework up front to make sure ours do move forward and we’re addressing key risks as early as possible,” she responded, adding that the company has a ‘long-term owner mindset’ with its background from Enel.

Shor went on to say that early-stage projects with notice-to-proceed (NTP) would generally sell for US$50-100,000 per MW in the ERCOT market. One recent deal providing a potential benchmark for an earlier stage sale than that was a project acquired by Italian firms Altea Green Power and Redelfi in January 2023 for. Based on the announced figures, it traded for around US$21,000 per MW and only just last week started a Full Interconnection Study by ERCOT. It is expected to hit COD in 2026.

Coincidentally, Altea Green Power is selling an early-stage pipeline in Italy and provided comments to in response to another developer’s negative view of using that as a route-to-market, for an article last week.

Early-stage project valuations depend on a number of factors, including stage of development, locational factors, revenue profile, if it’s in an energy community, as well as cost factors like above or below average property taxes and land costs, Shor added.

The ERCOT, Texas energy storage market is soaring with around 8GW set to come online in 2023, and deployments accounting for 70% of the US total in Q1.

As detailed in a piece last week, projects are currently benefitting from volatility in the face of an extreme heatwave sweeping the state, but average revenues are set to decrease in the coming years due to a combination of market saturation and new rules from ERCOT.

22 May 2024
London, UK
At the time of writing, Europe had had its most successful year in terms of Power Purchase Agreements (PPAs) with a record 7.8GW of renewable energy contracts signed. As we gather in May 2024 for the third edition of the Renewable Energy Revenues Summit, the energy landscape continues to evolve rapidly, influenced by the beating drum of climate change, volatility around power prices and the need to decarbonise power procurement as well as generation.
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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