First Non-Recourse Project Financing for Utility “Behind the Meter” Battery Energy Storage

Gaining the ability to raise not just venture capital or private equity but project financing from banks and financial services providers is a sure sign that a company and innovative, tech-driven business model is on its way to commercial maturity. That’s happening in the case of clean energy micgrogrids, “behind the meter” utility energy storage solutions and “virtual” power plants.

Macquarie Capital on March 28 announced that it had completed the first non-recourse project financing of “behind the meter” utility battery-based energy storage systems (BESS). The capital markets, private investing and corporate banking arm of Australia’s Macquarie Group, Macquarie Capital acquired a 50-megawatt (MW) portfolio of distributed, utility customer sited BESS from Advanced Microgrid Solutions (AMS) in August 2016.

San Francisco-based AMS was awarded a contract to install and manage the fleet of BESS by Southern California Edison (SCE) last September in order to shore up grid services the utility provides in power-constrained areas of its West Los Angeles Basin service territory.

Aggregating “Behind the Meter” Energy Storage to Shore Up Grid Services

Macquarie and AMS have continued to develop the distributed BESS fleet together. It’s expected to come online sometime in the next 12-24 months, according to a news release.

Located at various “large-load commercial, industrial and government host sites” in Los Angeles and Orange counties, the fleet of distributed BESS energy storage systems is to provide a mix of utility grid services including flexible dispatch and reserve capacity, solar integration and voltage management, as well as utility retail energy services such as demand management, back-up generation and enhanced power quality.

“Macquarie is financing a revolution in the energy industry,” said AMS CEO Susan Kennedy. “The era of energy storage has begun.”

Tremendous Opportunity

California’s second largest utility, SCE will purchase power capacity from Macquarie’s “behind the meter” BESS fleet according to the terms set out in 10-year service contracts to provide load reduction services, one facet of the utility’s strategic grid modernization plan, which stretches out to 2022.

“As an active developer in infrastructure assets globally, Macquarie believes there is tremendous opportunity for this asset class, and looks forward to continuing to grow its presence with leading innovators in the space including AMS, CIT and Tesla,” said Nick Butcher, Global Head of Infrastructure for Macquarie Capital.

Rhys Marsh, director of CIT’s energy finance group touted the unit’s experience and creativity in completing the industry-first. “Our deep expertise and track record of execution in financing distributed power assets allowed CIT to design a market-leading solution in support of Macquarie Capital, AMS and Tesla. We look forward to further building on our relationship with these pioneers.”

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