AI-driven energy storage firm Stem Inc will deliver 40MW of battery storage projects in ERCOT, Texas, for independent power producer (IPP) REX, the first of US$400 million the new firm plans to procure.
New York Stock Exchange-listed Stem will deliver four standalone 9.9MW battery energy storage systems in Texas for REX Storage holdings, an IPP which is a joint venture between Regis Energy Partners LP and Excelsior Energy Capital.
REX was incorporated in Texas in March 2022 and the order from Stem Inc is the first of a US$400 million equity commitment by REX to acquire construction-ready projects from Regis’ development pipeline within the ERCOT, Texas market. The Electric Reliability Council of Texas (ERCOT) runs 90% of the Lone Star State’s grid.
Regis will oversee the US$400 million pipeline’s development while Stem will provide its battery hardware alongside its AI-driven energy management system (EMS) platform, Athena, and long-term operational services for all the projects.
The initial four energy storage systems are under construction and are planned to come online in 2023. They could could potentially total around 10% of the overall pipeline based on a rough average cost per MW for lithium-ion battery storage systems of US$1 million, based on projects Energy-Storage.news has reported on.
John Carrington, CEO of Stem, commented: “The energy storage market in Texas represents a significant growth opportunity for leading renewable energy investors like Excelsior who recognise the rich merchant revenue opportunities in the ERCOT market.”
Daniel Senneff and Nathan Vajdos, co-founders and Managing Partners of Regis Energy Partners, added: “Distributed energy storage represents an unprecedented opportunity to rapidly modernise and strengthen Texas’ electricity grid. With the incredible amount of support and expertise provided by Stem and Excelsior, Regis has been able to execute a focused business plan centered around speed and simplicity to develop this portfolio of high-value projects.”
BESS projects under 10MW qualify for a more streamline and rapid regulatory approval process in the ERCOT market, so developers typically opt for that nameplate power rating for their first few projects before expanding power and duration further once they’ve reached a level of comfort in the market.
BESS units in the ERCOT market have historically relied on ancillary services RRS (regulation reserve service) and RRS-FFR (fast frequency response) but energy trading is a growing component of the value stack, as alluded to by Carrington.
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This article was updated post-publication after Stem Inc clarified to Energy-Storage.news that it would be providing its battery storage solution for the whole US$400 million pipeline.