Battery Storage, the Unsung Hero of the Energy Transition
As the world continues to push towards clean energy alternatives, finding efficient ways to store electricity is increasingly vital.
The ongoing adoption of electric vehicles and the ramping up of renewable penetration across the US have created sometimes problematic supply and demand imbalances in the electrical grid, making battery storage crucial to maintaining grid reliability and continuing the momentum of the energy transition.
According to forecasts by Wood Mackenzie, the demand for energy storage is expected to grow rapidly in the coming years, from 51 gigawatt-hours (GWh) in 2020 to over 420 GWh in 2040.
4 Battery Energy Storage Systems in Southern California
To help meet this increased demand, Hecate Grid, a joint venture between Hecate Energy and InfraRed Capital Partners, is in the process of completing the construction of a portfolio of four stand-alone battery energy storage assets in Southern California.
The location of the portfolio of battery storage systems in Southern California is no accident.
It’s positioned there because California, perhaps more than any other state in the US, will need to rely heavily on battery storage projects to manage the increased demand for renewable resources as the state progresses towards its lofty decarbonization goals.
And the scale of the Hecate Grid project is such that it is positioned to make a real contribution to efforts to address climate change and fortify the electrical grid.
The project consists of a 290 megawatt-hour (MWh) portfolio that includes four standalone Battery Energy Storage System, or “BESS”, one of which is operational and three that are currently in construction.
“Battery storage is often an overlooked but nonetheless critical component of the energy transition,” said Ahmed Maqsood, a banker on the energy team at Societe Generale in New York. “Simply put, as states across the US continue to push forward with their renewable portfolio standards, the demand for BESS will accelerate exponentially to provide replacement capacity value and grid stability.”
An innovative financing structure to draw investment
Societe Generale acted as a Coordinating Lead Arranger and Green Loan Structuring Bank for the $98.9 million financing to support the construction and operations of the BESS portfolio.
The financing’s innovative structure leveraged Societe Generale’s considerable experience advising and arranging debt financing for clients on a range of renewable energy projects, including solar, offshore and onshore wind, hydro, and sustainable fuels.
Devising attractive financing structures is of course important to draw investment and debt financing towards this important asset class, a rapidly growing segment that is also benefiting from incentives brought about by recent updates to the U.S.’s Inflation Reduction Act.
So, Hecate Grid’s recent portfolio could very well be at the forefront of a surge in similar battery storage projects. And that’s something to sing about.