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US grid-scale battery storage developer Key Capture Energy acquired by SK E&S

Key Capture Energy’s KCE NY 1 project in Upstate New York. Image: Key Capture Energy.

Update 10 September 2021: A Key Capture Energy representative told that SK E&S anticipates investing a billion US dollars into KCE. The representative said that the money will go towards building the team and developing, constructing and operating projects in KCE’s growing pipeline of projects around the country.

South Korean energy company SK E&S has agreed to acquire Key Capture Energy, a developer, owner and operator of grid-scale battery energy storage systems (BESS) in various regions of the US including Texas and New York.

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SK E&S is an affiliate of major Korean conglomerate SK Group and is involved in everything from shale gas and LNG power plants to hydrogen and renewable energy. The company’s renewable energy investments in the US include a joint venture (JV) with residential solar and energy storage install and leasing company Sunrun and the acquisition of a 345MWh portfolio of behind-the-meter BESS projects in Los Angeles which is managed by Stem Inc. In total, in Korea and the US, SK E&S operates around 700MWh of energy storage so far.

Having made those investments into the residential and commercial & industrial (C&I) segments of the US market, SK E&S is now set to acquire a majority stake in Key Capture Energy’s utility-scale business. The transaction remains subject to regulatory approvals and deal terms and is expected to close in the fourth quarter of this year. 

“SK E&S’s investment marks their confidence in our team, our strategy, and in the tremendous potential of the US energy storage market, which is estimated to be a US$8.5 billion annual market in 2026,” Key Capture Energy (KCE) co-founder and CEO Jeff Bishop said, welcoming the new owners.

Scaling up portfolios in hot markets, finding the next hot markets

Bishop has been interviewed for this site a few times on KCE’s projects and market strategies. Speaking with in a piece published last month, the CEO explained that KCE likes to find opportunities in US states that others might have overlooked, as well as targeting the more well-known markets like ERCOT in Texas. 

In either case, Bishop said, the company builds out smaller BESS projects on the order of about 10MW or 20MW as it enters a new market, proving the business case works before moving onto bigger ones. For example, the first grid-scale system KCE built in New York — which was also the state’s first grid-scale BESS — was 20MW, but now the company is developing sites that include a 200MW / 400MWh project that it hopes to execute in 2023. 

KCE, founded in 2016, has 254MW of standalone BESS projects in construction or already in operation, with a development pipeline of 3GW, aiming to have 1GW online in Texas, New York and New England by 2023, with a variety of different types of offtaker contract. It raised US$93.3 million in debt financing towards a 230MW portfolio of six projects in Texas towards the beginning of this year, three of which are already operational and the other three under construction. In New York, Bishop told KCE expects to build about 400MW to 500MW of projects in the 2023 – 2024 timeframe.

While the bulk of the developer’s new builds in the near future will be in those two markets, Jeff Bishop said the company also wants to be early in markets that will be “dominant in three to five years,” such as parts of MISO, the system operator jurisdiction which serves all or portions of 15 US states and Manitoba in Canada. More generally, he said that states which are retiring coal power plants en masse are of increasing interest: KCE has signed a deal to put a 20MW BESS on the site of a coal plant in Maryland for independent power producer (IPP) Talen Energy, for example. 

The acquisition by SK E&S will enable the developer to accelerate its growth plans while giving its new owner access to the US market that enables it to build an energy storage and clean energy platform.

“KCE’s impressive team with deep expertise in energy storage coupled with their proven project development, construction and operations capabilities opens the door to tremendous opportunities to advance the energy transition. This acquisition further aligns our business with the ongoing shift towards a cleaner energy future, and we are excited to leverage our resources together with KCE to build a next generation market-leading platform in the energy solution sector in the US,” SK E&S representative Kyungyeol Song said.   

Another SK Group company, SK Innovation, makes lithium-ion batteries and is building two battery gigafactories in the US state of Georgia, as well as having formed a partnership with US energy storage system integration solutions and services company IHI Terrasun earlier this year that could see SK batteries used in IHI Terrasun projects from next year. 

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