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Investors Castlelake and Gore Street buy big in Texas battery storage market

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Investment firms Castlelake and Gore Street Capital have acquired respective battery storage projects in the ERCOT, Texas market totalling nearly 600MW of storage capacity.

UK investor Gore Street Capital, through its Gore Street Energy Storage Fund (GSF), has acquired a 75MW/150MWh early-stage battery storage project in the Lone Star State. The project is expected to come online in the second half of 2024, and brings the fund’s total portfolio of projects to 937MW across the UK, Ireland, Germany and US. It first diversified out of UK/Ireland in early 2022.

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In related and concurrent news, newly-established energy storage-focused clean energy platform Peregrine Energy Solutions announced will develop two mid-stage projects in Texas totalling 490MW of battery storage capacity from developer Black Mountain Energy Storage.

It said the projects were acquired by ‘a global alternative investment manager on behalf of its funds’ without naming the investor. However, on the same day asset manager Castlelake, which has around US$20 billion under management, announced it was behind the creation of Peregrine Energy Solutions which would “benefit from the financial resources of Castlelake and its affiliated investment funds.”

On its acquisition, Gore Street said the project would require a minimum of £50 million (US$62 million) of investment and brings its US portfolio to 114.7MW. The firm cited the Inflation Reduction Act as a key tailwind in the US market and that ERCOT continues to be a lucrative market due to high renewables penetration, with ancillary prices recently clearing at almost US$3,000/MW/hour.

Alex O’Cinneide, CEO of Gore Street Capital, said: “This is a continuation of our diversification strategy of reducing single-point risk while gaining exposure to high-growth markets that demonstrate favourable characteristics similar to the GB and Irish markets.”

For its part, Peregrine Energy Solutions is expecting the two acquired battery storage projects – Best Southwest BESS in Dallas County, and Mallard BESS in Collin County – to come online in early 2025. It said the projects are strategically located near the Dallas-Fort Worth energy load pocket and within developing congestion pockets. ERCOT currently has around 2.7GW of battery storage online.

“These assets are a meaningful start for Peregrine’s mission to strategically identify, manage and unlock long-term value from a robust, diversified portfolio of renewable assets,” said Clay Canning, Director of Development for Peregrine Energy Solutions.

Black Mountain Energy Storage has been one of the most prolific early-stage developers in the ERCOT battery storage market. Last year, it sold 700MW to UBS in August, 400MW/600MWh to Cypress Creek Renewables in July and 100MW/200MWh to Recurrent Energy, part of Canadian Solar, in June. The company says it has 17 sites in the pipeline totalling 3,300MW and 4.6GW of queue positions.

With a big proportion of its renewable energy portfolio coming from wind, energy price volatility is particularly acute in the ERCOT market and battery storage systems can capitalise on this by being placed around particularly congested nodes. Part of this is a move to two-hour durations, as seen in the above projects, although Peregrine has not revealed the duration of its first sites.

London-listed GSF also announced that non-contestable works including grid transformers were energised for its 79.9MW Stony battery storage project in the UK, previously reported on by Energy-Storage.news’ sister site Solar Power Portal.

Energy-Storage.news’ publisher Solar Media will host the 5th Energy Storage Summit USA, 28-29 March 2023 in Austin, Texas. Featuring a packed programme of panels, presentations and fireside chats from industry leaders focusing on accelerating the market for energy storage across the country. For more information, go to the website.

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