Macquarie’s Green Investment Group, the green investment arm of Australian investment banking giant Macquarie Group, announced on Tuesday that it would invest in esVolta, a developer and owner of utility-scale energy storage projects across North America.
The move will enable Macquarie to tap into California’s grid-scale battery boom which, despite the impact of the global COVID-19 pandemic, saw record-shattering success through 2020 and built a pipeline expected to continue delivering record figures through 2021.
Macquarie Group acquired the Green Investment Group (GIG) from the UK Government in 2017 in a deal worth £2.3 billion ($A4.2 billion), which had launched the previously-named Green Investment Bank in 2012 as a publicly funded bank designed to mobilise private finance into the green energy sector – serving a similar role to that of the Australian Clean Energy Finance Corporation.
Macquarie Group then announced a goal of using its newly acquired investment vehicle to drive 20GW of new renewable energy projects around the planet.
In 2020 alone, Macquarie’s GIG signed deals for an 80MW Norway wind farm, 1GW of subsidy-free solar in the UK, and a portfolio of five floating offshore wind projects in South Korea with a combined capacity of over 2GW.
Macquarie’s GIG announcement this week furthers the Group’s commitment to investing in renewable energy around the world and will support Californian energy storage developer esVolta in financing its portfolio of over 600MWh of contracted energy storage projects, primarily located in California. Macquarie’s investment will also support esVolta’s additional development pipeline, which currently sits at more than 2GWh.
The investment will initially take the form of a bridge loan – a short-term loan pending the arrangement of a larger or longer-term financing – which will then be converted to equity upon receipt of regulatory approvals, including the approval of The Committee on Foreign Investment in the United States and the Federal Energy Regulatory Commission.
Led by a purpose-built team within GIG that focuses on investing in key, emerging aspects of the energy transition – including grid scale storage, distributed energy and fleet electrification, across both infrastructure and growth equity – the investment will provide Macquarie with a link into California’s booming renewable and energy storage growth.
“esVolta is a leading storage developer with an outstanding management team and significant growth potential across new markets,” said Greg Callman, Global Head of Energy Technology for the Green Investment Group.
“GIG is uniquely positioned to accelerate that growth and help deliver esVolta’s substantial development pipeline. Energy storage is critical to enabling increased renewables deployment, and we’re looking forward to leveraging our capabilities with esVolta to accelerate the energy transition across California and beyond.”
“With this agreement and support from the Green Investment Group, we are positioned to rapidly grow our energy storage business across North America,” said Randolph Mann, Founder & Chief Executive Officer, esVolta.
“Demand for energy storage in our home state of California remains strong, and we see vast opportunities for geographic expansion as well as additional product and service offerings. Our relationship with GIG will further broaden our expertise and unlock additional growth opportunities.”
Backed by the state’s goals of increasing renewable power by 2030 to 60%, and to 100% by 2045, California’s development of renewable power sources and energy storage projects shattered records in 2020. According to the most recent US Energy Storage Monitor report published by the US Energy Storage Association and power analysts Wood Mackenzie, California deployed 510MWh of grid-scale energy storage in the third quarter of 2020 alone – toppling national records all by itself.
While we do not yet have fourth quarter and full-year 2020 figures yet, we know that California’s development and deployment of energy storage projects has not stalled. At the beginning of December, Southern California’s leading electricity supply company Southern California Edison signed four long-term contracts totalling 590MW of battery energy storage projects, including three utility-scale projects.
This followed hot on the heels of the issue of a tender for 500MW of long-duration storage by eight Californian Community Choice Aggregators, which hopes to bring online eight to 16 hours of storage by or before 2026. The tender itself was heralded by a grid planning document published by the California Public Utilities Commission (CPUC) earlier in the year which acknowledged the need for “roughly 1 GW of pumped storage, or other long-duration storage with similar attributes, by 2026” and which also called for 8.9GW of new battery storage.