JP Morgan enters $200M joint venture to fund solar+storage developer
- 8minutenergy Renewables will receive over $200 million of equity capital from a joint venture with J.P. Morgan Asset Management and an affiliate of Upper Bay Infrastructure Partners to support its utility solar-plus-storage project pipeline of 10.7 GW, the company announced Tuesday.
- The capital will allow 8minutenergy to "aggressively expand in the United States," President and CEO Tom Buttgenbach told Utility Dive. While the company has been focused on solar and solar-plus-storage utility projects in California, it will be expanding to southwest Texas by building its first solar power plant, 280 MW, in April.
- The investment marks the growth of energy storage to a wider range of applications over the last two years, moving away "from more niche applications such as ancillary services to more mainstream" pairings with generation, according to Logan Goldie-Scot, head of energy storage analysis for Bloomberg New Energy Finance (BNEF). Standalone energy storage still doesn't get a lot of disclosed financial deals with Wall Street banks, he added, due to revenue uncertainty and technology risk.
Energy storage is becoming "part of the development pipeline for ... major PV solar developers or wind developers," Goldie-Scot told Utility Dive.
Currently, about 1 GW of 8minutenergy's projects pipeline includes a storage component, and nearly half of the programs in the pipeline have the potential to integrate storage, according to Buttgenbach. He anticipates the storage component of projects will expand, particularly in California which has a large amount of solar energy penetration.
Storage's potential to site alongside solar and wind is growing in the U.S. and leading to more investments. Storage developers and analysts view the J.P. Morgan investment as part of this broader trend, but downplayed its significance.
"On its own, I don't think there's any marks of a fundamental shift. It's just a natural sort of maturity in the market," Goldie-Scot said.
"I don't think [a bank investment of this size is] a big breakthrough and there have been already some transactions in the market on the solar and storage side, but it's definitely a very active space," Marek Wolek, vice president of strategy and partnerships at Fluence, an energy storage joint venture between AES and Siemens, told Utility Dive.
Fluence, an energy storage technology and services provider that specializes in large-scale storage, has participated in a few projects that received bank financing, according to Wolek, such as one in California that received $2.5 billion of debt financing for energy storage and a combined-cycle gas plant.
"We expect over the next couple of months [that] you will see many more of those announcements because of transactions which are in the process right now," Wolek said.
The increasing draw of solar-plus-storage developments might also be due to grid-connected storage manufacturers being larger and getting backed by big names, whereas solar photovoltaic (PV) manufacturing has "been a wild ride," according to Buttgenbach.
"If you look back five years into the PV markets, there were 200-plus panel manufacturers, people popping up out of nowhere and then disappearing again," he said. "If you look at the storage side, the good news is there's a lot fewer players and the players that are in the market are pretty much all large balance sheet players."
The grid-connected storage market "came directly out of consumer electronics," Mark Higgins, chief operating officer of Strategen Consulting, told Utility Dive. While there are a number of startups in the space, there are more players that scale to a large market, which is easier to finance, "unlike the early days of solar," he said.
Buttgenbach said he is shutting down the company's international operations, further consolidating 8minutenergy's U.S. presence as its Southwest pipeline matures.
Buttgenbach contributed an undisclosed amount to the joint venture with J.P. Morgan. He bought out the company's other co-founder and became 8minutenergy's CEO on Dec. 6.
CORRECTION: A previous version misnamed the Fluence employee that gave the statements in this article. It's Marek Wolek, vice president of strategy and partnerships at Fluence.
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