Macquarie invests $200m in major US battery storage rollout

ASX listed Macquarie Group has inked a major deal with California-based Advanced Microgrid Solutions, to bankroll the development of a $200 million fleet of major distributed energy storage projects at a variety of US commercial, industrial and government sites.

The transaction – which Greentech Media says could amount to the “largest dedicated energy storage finance vehicle” – will fund some of the major contracts AMS has already secured.

These include the installation 300MWh of behind the meter battery storage and demand management for California’s second-largest utility, Southern California Edison, to better service its commercial, industrial water and university customers in the West Los Angeles Basin area.

SCE will purchase capacity from the AMS fleet of behind-the-meter, battery-based energy storage systems under 10-year capacity contracts to provide load reduction services, as part of the utility’s plan to modernise the grid by 2022.

Another major project will equip 24 office buildings of California real estate firm Irvine Company with Tesla Powerpacks and AMS energy management software, in effort to use battery storage to “shave peak energy while also providing Southern California Edison with up to 10MW of capacity.”

The AMS storage systems will also be used to improve grid solar integration and voltage management, as well as for retail energy services like demand management, back up generation and enhanced power quality.

For AMS, the $200 million from Macquarie Group’s principal investment arm, Macquarie Capital, is not just a financial investment in the landmark energy storage projects, but an endorsement for the company’s business model.

“Macquarie Capital is the gold standard for investment in critical infrastructure,” said Kelly Warner, President of AMS. “Combining our innovative designs and technology with Macquarie’s development and financing expertise will enable us to deliver best-in-class storage solutions and build tomorrow’s energy grid.”

For Macquarie’s part, AMS is a good bet on the shape of future energy infrastructure.

“AMS’ focus on contracted, grid-scale energy storage projects stands out amongst developers forging a path in energy storage space,” said Rob Kupchak, head of US power, utilities and renewables for Macquarie Capital.

“The next decade is likely to see huge changes in the mix of energy consumed across the globe, and we see energy storage rapidly emerging as a growth market in the next generation of energy infrastructure,” he said.

Indeed, AMS’s approach stands out, as Greentech Media has noted, because it is working with utilities from the start to identify the optimal amount of load-shifting that can be applied at local stress points, rather than signing up customers for behind-the-meter batteries and then looking for ways to sell their capabilities to the utility.

“Equipping a building with the technology to store and manage its own electricity turns that building into a standalone storage unit,” and if you “combine a dozen buildings into a fleet, you have the utility equivalent of a peaker plant,” AMS CEO Susan Kennedy told GTM recently.

“We’re offering utilities a customised solution using energy storage behind the customer’s meter, harnessing that load to provide specifically what the utility needs in a particular region. It’s a clean, fast, flexible product that doesn’t exist in the utility world today.

“If we get this right with the utilities we’re working with, it opens up the customer side – the customer as the ‘prosumer,’ as the one who is actually generating a grid resource and opening up that value stream for the utility,” Kennedy said.

According to AMS, Macquarie will take ownership of the project company and will also carry interest. AMS has received equity funding from DBL Investments, Arnold Schwarzenegger and Engie SA, the large French electricity and gas provider.