Swell Energy seeks US$450m financing for distributed solar-plus-storage virtual power plants

Swell Energy is a Tesla Certified installer and the Tesla Powerwall 2 features prominently on the company's website. Image: Tesla.

Swell Energy, a provider of distributed energy storage systems headquartered in Southern California, is seeking to develop four virtual power plants (VPPs) by mid-2023, through aggregating 100MW of solar PV with 200MWh of battery storage capacity at customer sites.

The company, which was established in 2014, seeks to connect its growing network of residential battery and solar systems to utilities that can then use their stored energy capacity and technical capabilities to provide value to their networks. Swell wants to start building up its VPP network by the beginning of next year.

This means value is created for the utilities in several ways including through demand charge mitigation, ancillary grid services, capacity and resource adequacy as well as through transmission congestion management and other ways to manage network costs. Meanwhile the customer benefits from having an energy storage system at a reduced cost, with all the behind-the-meter values they can provide such as aiding self-consumption of solar and enhancing energy security and reliability.

Swell Energy said that utilities in three US states have commissioned the company to establish 200MWh of energy capacity through approximately 14,000 household solar-plus-storage installs that will provide support and services to their local grids and to the utilities.

Through partnering with investment management company Ares Management Corporation and asset manager Aligned Climate Capital, Swell has created a financing vehicle to fund up to US$450 million of capital investment for its VPP portfolio. At the same time, Swell Energy has launched a subscription agreement service for homeowners to finance their energy storage systems through the company. Swell claimed its VPP will be able to net revenues from capacity payments for 20 years.

“Our coordinated investment in Swell’s 200 MWh Utility VPP portfolio signifies an evolution in how we think about funding power plants across the US. Swell has demonstrated our long-held belief that energy storage is an asset class that holds great value for homeowners, utilities, and investors,” co-head of Ares Infrastructure and Power, Keith Derman said.

Aligned Climate Capital’s chief operating officer Brendan Bell described the VPP network as “the future of distributed solar,” adding that “Swell’s ability to network these batteries” as a VPP “unlocks the full value for both the homeowner and the utility.”

The news follows recent VPP project contracts in the US for Sunrun and Sunverge in Canada, while perhaps the world’s most advanced VPP to date in terms of customer acquisition and participation is in South Australia. 

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