Large Scale Battery Storage Facilities Will Help Arizona Weather the Storm


Arizona ranked as the second hottest state in the United States in July 2023, with an average temperature of 85.7º Fahrenheit, or 29.8°C, and has been among the fastest warming states in the US over the last 50 years.

This poses an increasingly pressing challenge to utilities in Arizona and other states in the US that are experiencing more extreme temperatures. The ability to reliably deliver electricity to homes and businesses during hot spells or cold snaps, when demand is peaking and the strain on the state’s electrical grid might be redlining, is becoming a looming concern. 

To help enhance the stability of Arizona’s grid, as well as boost clean energy consumption, industry-leading battery energy storage developer Plus Power recently announced two industrial-sized energy storage facilities in Arizona. The company currently has a 60+ project portfolio totaling over 10 GW of large-scale lithium-ion battery systems in 25 states and Canada. The Arizona projects, when completed, will have a combined battery capacity of 340 MW (1,360 Megawatt-hours). That is enough energy to power roughly 300,000 residential homes.

Both Arizona projects are currently under construction and expected to be online by the second quarter of 2024, in time for another summer of anticipated record peak demand. The two facilities will be constructed in Avondale and Gilbert, two cities adjacent to Phoenix, which is the hottest city in the United States. 

The Avondale project, named the Sierra Estrella Energy Storage facility, raised a record $707 million in total financing, with $505 million in the form of debt financing and the remainder provided via tax equity. The transaction represents one of the largest financings to date for a standalone energy storage project. It’s strategically located directly on the transmission system rather than next to an electrical generating source, which will help the system respond better to changes in demand.  

Societe Generale’s Energy+ Group, which specializes in providing financial and advisory services to renewable energy project owners and developers, acted as the Coordinating Lead Arranger on the combined $903 million deal to fund the construction and operation of the two projects.

This deal is truly a win for everyone involved. Not only will these landmark projects boost the state’s grid stability but, more generally speaking, will be important contributors in the transition to cleaner energies
Eric Kim,Societe Generale Americas Energy + Group

The increased development of energy storage facilities is helping accelerate the transition to clean energy by making intermittent technologies more viable, discharging when the sun is not shining and the wind is not blowing, thus balancing grid supply and demand needs. 

The ability to store its abundance of clean energy – Arizona ranks second in the nation in solar energy potential – will allow the state to have a steady supply of clean energy available, further lowering its reliance on fossil fuels. And, importantly for the consumer, storing clean energy during periods where demand is not high can allow for reduced costs during peak demand.