Swell Energy is financing the construction of four virtual power plants (VPPs) representing over 200 MWh of distributed energy storage paired with 100 MW of solar photovoltaic capacity in three states — approximately 14,000 solar energy generation and storage systems, intended to provide valuable grid services to the utilities and the local grid. To support the deployment of these and other distributed energy projects, and in partnership with a fund managed by the Infrastructure and Power strategy of Ares Management Corporation and Aligned Climate Capital, Swell has created a VPP Financing Vehicle to support up to $450 million of capital investment for its nationwide VPP portfolio.
Structure: The financing vehicle has been structured with Swell’s utility contracts in mind, and with the VPP capacity payments serving as a distinctive feature. Over the next 20 years, distributed energy systems in Swell’s current VPP portfolio are expected to generate over 3,000 gigawatt hours of clean solar energy, with customers potentially storing 1,000 gigawatt hours for later use, and dispatching over 200 gigawatt hours of this stored solar energy during events when the utility calls on the VPP for capacity.
“Utilities are increasingly looking to distributed energy resources as valuable ‘grid edge’ assets,” said Suleman Khan, CEO of Swell Energy. “By networking these individual homes and businesses into virtual power plants, Swell is able to bring down the cost of ownership for its customers and help utilities manage demand across their electric grids,” said Khan. “By receiving GridRevenue from Swell, customers participating in our VPP programs pay less for their solar energy generation and storage systems, while potentially reducing the risk of a local power outage, and keeping their homes and businesses securely powered through any outages.”
Subscription concept: In conjunction with the closing of its first VPP Financing Vehicle, Swell also announced the launch of its Home Energy Subscription Agreement, which allows homeowners to finance their home energy systems through Swell, while generating, storing and consuming their home’s energy in an optimized and transactive manner. Swell will commence delivery of energy capacity and grid services for its first utility VPP on January 1, 2021, with contracted capacity across Swell’s VPP portfolio ramping up to 200 megawatt hours of energy storage by June 2023.
“Our coordinated investment in Swell’s 200 megawatt hours Utility VPP portfolio signifies an evolution in how we think about funding power plants across the U.S.,” said Keith Derman, Co-Head of Ares Infrastructure and Power. “Swell has demonstrated our long-held belief that energy storage is an asset class that holds great value for homeowners, utilities, and investors.”
“This is the future of distributed solar,” said Brendan Bell, COO of Aligned Climate Capital. “Swell’s ability to network these batteries as a Virtual Power Plant unlocks the full value for both the homeowner and the utility.”