Utility fund raises $680 million for new energy tech; Clearway buys 4.7 GW Sunpower pipeline

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Utility-backed fund raises $681 million for advanced energy technologies

Energy Impact Partners (EIP), an investment group backed by global utilities, has raised $681 million to invest in cutting-edge energy technology companies, the company announced September 5.

The new investment capital includes $531 million in capital from its utility-backed Flagship Fund and access to up to $150 million in debt from the U.S. Small Business Administration (SBA) for EIP's credit platform, it said.

EIP's utility partners include Southern Company, National Grid, Xcel Energy, Ameren, Great Plains Energy, Fortis, AGL, Avista, MGE Energy, TEPCO, PTT, OGE Energy, TransCanada, and Alliant Energy.

EIP has already invested over $200 million in advanced energy technology companies including Advanced Microgrid Solutions, Arcadia Power, AutoGrid, BHI Energy, Cimcon Lighting, Clevest, Dragos, ecobee, Enchanted Rock, FirstFuel, Greenlots, Mosaic, Opus One Solutions, Powerphase, Sense, Sparkfund, Tendril, and Urbint.

EIP's priority investment sectors have included electric vehicle charging technology, behind-the-meter storage, cyber security and Internet of Things applications.

Fund manager Clearway buys 4.7 GW of Sunpower development assets

Clearway Energy Group, a major new renewables group created by Global Infrastructure Partners (GIP), has purchased 4.7 GW of utility-scale solar development projects from SunPower, the company announced August 31. Clearway is the new U.S. renewable company created from GIP's purchase of NRG Energy's renewable energy business.

In February, GIP announced it would buy NRG Energy's controlling stake and 46% economic interest in NRG Yield (NYLD), as well as NRG’s renewable energy operations and maintenance (O&M) and project development businesses.

At the time, NYLD had a market capitalization of $3.2 billion and operating capacity of 5.1 GW, spread across wind, solar and fossil fuel assets. The portfolio has an average remaining contracted life of 16 years.

GIP named the new company Clearway Energy Group. Before the Sunpower agreement, the new company operated 2.8 GW of wind power capacity, 1.1 GW of utility-scale solar, and over 300 MW of distributed and community solar. Clearway also owns an 8.9 GW pipeline of renewable energy projects in development, and provides O&M and asset management services to 4.1 GW of renewable capacity.

The Sunpower asset purchase covers projects in 16 U.S. states and will “strengthen Clearway's robust pipeline of utility-scale solar development projects,” the company said.

New US storage volumes hike on longer battery durations

The volume of U.S. utility energy storage capacity connected to the grid in 2017 rose by 89% to 1.3 GWh as average battery durations lengthened, according to a survey of utilities by the Smart Electric Power Alliance (SEPA).

U.S. utilities connected 217 MW of energy storage to the grid in 2017, down 3% year-on-year on a MW basis, raising total installed utility storage capacity to 923 MW, the survey showed.

Falling costs, rising renewable energy capacity and recent federal orders are expected to boost energy storage demand.

Earlier this year, the Federal Energy Regulatory Commission (FERC) issued Order 841, requiring grid operators to establish market rules to allow energy storage to participate in wholesale markets.

Order 841 supports a framework for storage to sell capacity, energy, and ancillary services into wholesale markets, and sets standards for dispatchability and project size.

                                         FERC Order 841 timeline

                                                            (Click image to enlarge)

Source: Smart Electric Power Alliance (SEPA)

Solar plus storage projects are sprouting up across the U.S., SEPA noted.

Falling storage costs and rising solar renewable energy penetration are improving the economics of solar plus storage. A recent request for proposals (RFP) by Colorado's Xcel Energy recently yielded 87 bids for 59 solar plus storage projects at a record-low median bid price of $36/MWh, competitive with many fossil-fuel power plants.

Following rapid drops in battery prices, developers predict lower balance of system costs and engineering improvements will create new storage coupling opportunities.

Solar plus storage projects currently represent more than 40% of the global pipeline for grid-scale energy storage, IHS Markit said in a report published in April.

Last year, Arizona's Salt River Project (SRP) signed a solar plus storage PPA for a 20-MW solar array with a 10 MW, 40 MWh battery storage system, SEPA noted. SRP will study the economic feasibility of storage to smooth out solar intermittency and the project will help SRP meet its goal of 20% retail electricity from renewable energy by 2020.

Florida Power and Light is also deploying batteries at two 74.5-MW solar farms that will charge with solar normally clipped during peak generation periods and supply during peak demand periods.

In Texas, Vistra Energy is developing a 10-MW, 42-MWh storage project to capture and discharge energy that would otherwise be curtailed as part of a 180 MW solar PPA. The battery will also charge from the grid at night and discharge during the mornings to make the ramping up and ramping down of power generation more predictable.

In California, the economics of PV plus storage projects could overtake stand-alone PV in California in the coming years as the demand for solar 'peak shifting' and frequency response services grows, the U.S. National Renewable Energy Laboratory (NREL) said in a report last year.

By 2020, the business case for coupled PV with energy storage in California could be more favorable than stand-alone PV, NREL said.

Mining companies to seek out wind, solar contracts as costs fall: Fitch

Mining companies will increasingly turn to wind and solar power in the coming years, attracted by lower costs and environmental targets, Fitch Solutions said September 7.

Most mining companies continue to rely on fossil fuel-based grid power or off grid diesel units. Falling costs and an increasingly-favourable regulatory environment will see more miners seek out wind and solar contracts, particularly in the Americas where companies can benefit from existing renewables infrastructure and carbon pricing mechanisms, Fitch said.

Falling costs will be the main driver of demand from mining companies. Energy costs currently account for approximately 30% of miners' balance sheet costs, according to some estimates.

"We expect this [%] to increase over the coming years as ore reserves are depleted, forcing companies to adopt more energy-intensive mining methods," Fitch said.

"In an environment where miners will remain committed to keeping costs down, the use of renewables offers significant cost-reduction potential," it said.

 Mining installed renewable energy capacity, by type

Source: Fitch, Energy and Mines

Renewables also offer a reliable source of electricity to mining sites, allowing companies to reduce local political and regulatory risks.

"For instance, Zambia's overdependence on hydropower resulted in a tariff dispute between the government and the country's key copper miners last year that led to power outages and production stoppages at Glencore's Mopani Mines, one of the country's largest," Fitch said.

Following the 2015 Paris Climate Change Pact, mining hubs have implemented measures to progressively reduce emissions, incentivizing mining companies to shift towards renewables.

"For instance, in Chile and Canada, the introduction of carbon pricing schemes, at $5/tonne and $10/tonne, respectively, is pushing miners to increasingly consider ways of limiting their carbon exposure as a core strategic objective and attracting interest in renewables investments," Fitch said.

Electric vehicle and consumer electronics companies will become increasingly valuable customers for mining companies and this will further increase the pressure to reduce environmental impacts, it said.

In one example, Apple and top aluminium producers Rio Tinto and Alcoa recently announced plans to invest in carbon-free aluminium production through Elysis, a new joint-venture. Together with the Canadian and Quebec governments, the companies will invest C$188 million ($142.7 million) in the new business.

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