NTPC Renewable Energy has ordered turbines from Indian manufacturer Inox Wind for a 150MW wind project in Gujarat, India.
Inox has also secured a deal to carry out operations and maintenance services at the development.
Equilibrium Energy and Hatch Renewables have agreed a partnership to manage utility-scale battery storage by pursuing tolling agreements with developers that have operating assets or projects with near-term commercial operation dates.
Under an energy storage tolling agreement, the developer of the energy storage system is responsible for obtaining site control, permits, interconnection rights, equipment, and construction contracts, as well as achieving agreed-upon milestones such as a target commercial operation date and a guaranteed commercial operation date. The buyer—often the utility company—pays for the electricity used to charge the energy storage system, and receives the right to charge/discharge the system for energy and ancillary services.
“Equilibrium and Hatch have been working closely together over the past year to formalize the partnership and screen an initial set of tolling opportunities in ERCOT [Electric Reliability Council of Texas],” a statement said.
The US Inflation Reduction Act 'opened the door' for tax equity investment in standalone storage, but exorbitant costs and a shortage of providers make it an unrealistic option for smaller developers
One of the benefits of the US Inflation Reduction Act (IRA) – which was introduced last year – was the creation of an investment tax credit (ITC) for standalone energy storage projects. Prior to the enactment of the IRA, the Section 48 investment tax credit (ITC) did not apply to standalone storage projects – storage projects could only claim the ITC if they were installed in connection with a new solar generation facility, and then only if the energy storage project was charged at least 80 per cent by the solar facility. The IRA changed the landscape, however, by extending the Section 48 ITC to standalone storage.
Storage market observers have lauded the legal change, saying it will provide a much-needed new source of capital for standalone storage projects in the form of the tax equity investor. What is a tax equity investor? They are usually large financial institutions – such as banks and insurance firms – that have substantial tax obligations and therefore want the tax credits, while also seeing the typical yield of 6% to 8% as an attractive return.
How exactly does a tax equity investment work? An investment of this type could be structured in one of a number of ways, but the most frequently used mechanism is the ‘partnership-flip’. This involves a tax equity investor investing capital into a special purpose vehicle (SPV), which is set up by the project developer and treated as a partnership for federal income tax purposes. The main objective of the SPV is developing, owning and operating one or more energy storage assets.
In return for making the investment, the tax equity investor is issued shares in the partnership that mean it is entitled to almost all of the partnerships tax items and an agreed proportion of its cash distributions. At some point in the future, the tax equity investor will have received enough tax items and cash to reach a negotiated internal rate of return on its investment, a time which is usually described as the ‘flip date’. Now, the percentage allocations of tax items and cash flow ‘flip’ with the result that most company tax items and cash flows are subsequently allocated and distributed to the developer rather than the investor.
It's undoubtedly a handy new source of financing for some standalone storage projects and, in February this year, Eolian – a portfolio company of Global Infrastructure Partners – announced that it had closed what it described as a first-of-its-kind tax equity investment in two standalone utility-scale battery storage projects located in Mission, Texas. The Madero and Ignacio projects are interconnected battery storage facilities located on a single site with a combined operating capacity of 200MW. “This pioneering financing is the first use of the Investment Tax Credit (ITC) structure by a standalone utility-scale battery energy storage system and is possible due to passage of the Inflation Reduction Act of 2022,” an Eolian statement said. The tax equity investment in the projects was provided by a fund managed by Churchill Stateside Group, LLC.
But there is scepticism about whether tax equity financing will be as widely used to fund standalone storage projects as is hoped. To begin with, the amount of tax equity investment available is limited. For example, during the period 2020 to 2021, more than 50 per cent of the $20 billion tax equity market’s investment supply came from just two large banks: JP Morgan and Bank of America. There are other major players – such as Wells Fargo, US Bank and Credit Suisse, but the field is small because participants not only must have big enough tax obligations to desire tax breaks, but also have the capacity to set up and manage what is an extremely complex instrument. Indeed, the fact that tax equity investment is so complex means that it also acts as a deterrent for smaller energy storage developers – senior executives at storage companies have lamented the fact that arranging tax equity financing is much more difficult than securing project finance. It’s also very expensive to arrange tax equity financing, which consequently puts it out of the reach of many storage developers. Such deals often incur costs exceeding $1 million, with even the simplest structures costing more than $250,000 to set up.
Will the number of tax equity providers increase? Possibly – it’s been mooted that more corporates could enter the fray, particularly those already backing clean energy projects via power purchase agreements. For example, in March this year, Nestlé agreed a deal with Enel North America that saw the food and drink company become the sole tax equity investor in Enel's 208 MWdc Ganado solar-plus-storage project in Jackson County, Texas. Amazon, Google and Toyota are among other big-name corporates that have made tax equity investments in the renewable energy sector. Indeed, there is speculation that, with the pressure on corporates to minimise their carbon footprint increasing, from an environmental, social and governance (ESG) perspective, tax equity investment could be a way for companies to demonstrate ‘additionality’, that is, a positive impact or outcome that would not have otherwise occurred without additional resources or capital investment.
That said, there are doubts that the provision of tax equity investment by corporates – as opposed to large financial institutions – will take off in a big way. The plain truth is that only a handful of corporates have seen fit to get involved in tax equity deals up to now.
Yet tax equity deals are expected to become a more prominent feature in the energy storage sector. A report published last week by the law firm Troutman Pepper – entitled Taking Charge: Inside the U.S. Battery Boom – highlighted that the biggest challenge for battery owners and tax equity investors is that standalone batteries are not generating assets like solar or wind farms, where tax equity is linked to project cashflow from energy production. “Batteries have different revenue streams that will pose a challenge for the market,” the report concluded. Yet the report said that it is anticipated that projects where the power output is fully sold will “get to a stage where tax equity investors are comfortable underwriting those projects using traditional tax equity structures”. However, merchant storage projects are more likely to use transfer mechanisms, as they rely more on fluctuating demand and pricing of energy. Troutman Pepper has also stated that developers now looking at standalone storage projects will have to find the right mix of merchant exposure and contracted offtake to attract tax equity investors without diminishing overall returns.
At present, sources of tax equity investment are limited and consequently the number of storage projects that are financed using this mechanism in the short term will amount to a trickle rather than a flow. The cost of setting up tax equity structures can be prohibitive for developers of smaller storage projects and the fact that so few institutions are offering this type of investment means they will be very careful about which projects they choose to back.
But the outlook could change. With regard to certain clean energy tax credits, for tax years beginning after December 31, 2022, the IRA allows for transferability – wherein a tax credit can be transferred or sold to another taxpayer or tax-paying entity for cash, a mechanism often used to incentivise businesses to invest in a certain area or industry, like renewable energy. The expectation is that this will likely bring more tax equity investors into the market and increase competition. In addition, there is a view that more corporates will begin deploying tax equity investments via syndications, which Cohn Reznick Capital has highlighted as an “easy avenue for new entrants, particularly corporations”.
Alinta Energy has appointed UGL and the Shanghai Electric Power Design Institute Co and Monford Group Pty Ltd (SEPD Monford) to deliver its Port Hedland solar battery hybrid project in Australia.
UGL, a CIMIC Group company, has been appointed to deliver the 35 MW one-hour battery storage system and SEPD Monford to deliver an approximately 45 MW AC fixed-tilt solar array, for a total project cost of around $180 million.
The project is expected to create around 200 jobs and be operational by late 2024.
The project underpins a power purchase agreement with BHP that’s expected to halve emissions from the generation of electricity used to power BHP’s WA iron ore port facilities in Port Hedland.
Once completed, it’s expected that 100 per cent of the forecasted average daytime energy requirements for BHP’s port facilities will be powered by solar generation, with the remaining power requirements to be met via the battery and Alinta Energy’s existing gas-fired power station.
Alinta Energy, BHP, UGL and SEPD Monford are “committed to seeking opportunities to include local and indigenous content, including opportunities for local, Pilbara Aboriginal and Kariyarra Traditional Owner businesses,” a statement said.
German utility RWE has become sole owner of the 1.6GW Nordseecluster of German offshore wind projects after buying Northland Power's 49% stake for €35m.
The cluster is made up of four offshore wind projects in the German North Sea that were co-developed by RWE and the Canadian independent power producer Northland Power.
The Department of Energy has withdrawn a $200 million grant that had been awarded Microvast - a manufacturer of lithium-ion batteries for energy storage - amid allegations that the company has close ties with the Chinese government and Chinese Communist Party.
Microvast had previously announced plans to build a mass production facility in the US for its polyaramid separator, a high-temperature resistant, fire-retardant component used in lithium-ion batteries. The $200 million DOE grant had been part of a larger investment of $504 million.
US Senator John Barrasso (R-WY), a member of the Senate Committee on Energy and Natural Resources, said: “The Department of Energy has finally retreated from sending US taxpayer dollars to Microvast, an electric vehicle battery company with close ties to Communist China. I’m stunned it took the Biden Administration this long to admit the obvious: no company beholden to Communist China should be considered for US government grants or loans. The administration should immediately reject other applicants with similar ties. It should also overhaul its grant making process and conduct due diligence before issuing press releases.”
In response, Yang Wu, Microvast’s founder, chairman, president, and chief executive officer, said: “The company is surprised by the DOE’s decision to withdraw the grant, which was designed to help build a new facility in Kentucky that would employ hundreds of people. Microvast is based in Texas, its shares are traded on Nasdaq, and the operations for our global business are centralised in the US. Neither the Chinese government nor the Chinese Communist Party has any ownership in the company, nor do they control or influence company operations in any way. The company is therefore considering all of its options.”
BW Ideol and Elawan Energy have agreed to form a joint venture to develop a multi-gigawatt portfolio of floating offshore wind projects off the coast of Spain and Portugal.
The companies have agreed heads of terms for a deal but said the tie-up was still subject to further negotiations.
US energy storage technology Moxion Power is to build a 205,000 square foot gigafactory at Ford Point in Richmond, California to manufacture batteries for energy storage.
The facility - located next to Moxion’s existing factory at the Ford Point Assembly Plant, near the Rosie the Riveter/WWII Home Front National Park - will have more than 7GWh of annual battery manufacturing capacity.
Moxion said the gigafactory would create “hundreds of local manufacturing jobs”. The project is being developed at Terminal 3, an underutilized port terminal at The Port of Richmond, the third largest deepwater port by volume in the state. As production ramps up, Moxion projects its team to grow from 250 to over 1,000 employees, including hundreds of engineers and manufacturing professionals.
Centrica Energy Trading and Frankfurt Airport owner Fraport have agreed to buy electricity from a PNE wind farm in northern Germany.
The five-year power purchase agreement is due to start in July 2023. Centrica Energy Trading has agreed to buy the power produced by the wind farm, which is owned by PNE, and then provide Fraport with 63GWh annually.
Renewable Power Capital has signed a deal to supply vehicle group Forvia with power from its 146MW Klevberget onshore wind project in Sweden.
The firms have agreed a power purchase agreement for almost all of the electricity produced by the project, which is due to complete in November 2023. The deal is equivalent to around 40% of all of the electricity required by Forvia's European plants.
Ørsted has agreed to pay $625m for Eversource's 50% stake in a US seabed area with potential for up to 4GW of offshore wind. The zone, called Lease Area OCS-A 500, is currently jointly owned by the two companies.
UK renewable developer Clearstone Energy has sold two battery energy storage system (BESS) projects in southern England to Foresight Energy Infrastructure Partners.
The projects are: Sundon BESS, a 49.5MW project north of London that will connect with National Grid’s Energy Park initiative; and Warley BESS, a 57MW project in Essex. Both sites have grid connection dates in 2024.
The projects will be built on land owned by National Grid that is close to substations on its national high voltage transmission network. The National Grid Energy Park programme aims to work with developers to speed up the process of adding battery storage to the transmission network.
Energy storage platform provider Powin has selected manufacturing company Jabil Inc to accelerate the development and delivery of Powin’s ‘Stack 750’ product.
Powin said it had selected Jabil - based in St. Petersburg, Florida - due to a combination of the company’s “high-level assembly techniques, deep energy storage prowess, and commitment to environmental health, social equity and sustainable practices”.
Powin has over 6,000 MWh of energy storage systems that have been deployed or are under construction with an additional 11,000 MWh in contracting worldwide.
Hyphen Hydrogen Energy has agreed with the government of Namibia to develop a $10bn green hydrogen production plant in the African country.
By 2030, the project is intended to use green hydrogen produce two million tonnes of green ammonia annually for regional and global markets.
Mercedes-Benz has picked German developer UKA to install a 120MW wind farm at its vehicle test track in Papenburg, northern Germany.
The wind farm is intended to cover around 20% of the annual electricity requirements of Mercedes-Benz group in Germany. The approval process for the project is due to start by the end of 2023, with commissioning scheduled for 2026.
Norwegian utility Statkraft has committed to install 250MW of green hydrogen capacity in Germany by 2030.
The plan follows Statkraft's announcement last month that it would install a 10MW green hydrogen pilot project by 2025 at its existing power plant site. The capacity is set to be backed by 2GW of new wind and solar.
GE Vernova has committed to invest $50m in its factory in Schenectady, New York, so it can produce key components of the firm's 6.1MW onshore turbine.
The company is planning to use new manufacturing lines at the plant to assemble the machine head, hub and drive train components of the 6.1MW platform, which is designed for areas with low and medium wind speeds. The first components are due to be produced in around September 2023.
Chinese lithium-ion battery manufacturer Rept Battero has agreed a deal with US energy storage company Energy Vault to supply 10GWh of batteries, with initial deliveries scheduled for Q3 2023.
The deal will see Rept Battero initially deliver 280Ah batteries, followed by the company's ‘Wending Battery’, which is “designed for larger capacity and greater life cycle”.
Established in 2017, Rept Battero is the first renewables-focused company invested in by Tsingshan Group.
“The establishment of a strategic partnership represents a significant milestone for Rept Battero’'s energy storage business in its pursuit of global expansion and entry into foreign markets,” a statement said.
Swiss fund manager SUSI Partners, through equity fund SUSIEnergy Transition Fund (SETF), has taken a controlling equity stake in Encore Renewable Energy, a US clean energy company specialised in the development, construction, and operation of distributed and utility-scale solar PV and battery storage assets.
SUSI is injecting additional equity into Encore to “complete its shift from project developer to independent power producer by scaling the business and further strengthening its asset base,” a statement said.
Based in Vermont and active throughout the northeastern US, Encore has a particular focus on the redevelopment of abandoned brownfield sites, which “often benefit from streamlined permitting and zoning”, SUSI said.
The deal represents SETF’s second investment in the US after the acquisition of a 100 MW portfolio of front-of-the-meter battery storage projects in South Texas announced last August, which is expected to be fully operational before the summer.
SUSI Partners specialises in sustainable energy infrastructure investments and has €1.9bn in capital commitments from institutional investors.
Pulse Clean Energy (PCE) has secured a three-year £175 million credit facility with a syndicate of banks - including Santander, UK Infrastructure Bank (UKIB), CIBC and Investec - to finance the development of energy storage projects across the UK.
The UKIB provided £62.5 million of the financing, with the commitment representing its first debt transaction in battery storage.
PCE has plans to invest a total of more than £1 billion in the deployment of more than 1GW of battery energy storage systems across 20 sites in England, Scotland and Wales over the next three years.
PCE’s plans include the conversion of several existing energy generation sites to BESS facilities.
We are thrilled to announce the launch of our highly anticipated Wind Power List 2023 sponsored by Green Giraffe. The list is a comprehensive ranking of the top players in the wind power sector, recognising their contributions to advancing the industry and driving the transition towards a cleaner and more sustainable future.
We are thrilled to announce the launch of our highly anticipated Wind Power List 2023 sponsored by Green Giraffe. The list is a comprehensive ranking of the top players in the wind power sector, recognising their contributions to advancing the industry and driving the transition towards a cleaner and more sustainable future.
The Wind Power List comes in a new format for 2023. Our decision to change the format for 2023 reflects the global nature of the wind industry. As the sector's largest companies expand their presence in diverse markets across Europe, North America, Asia, and beyond, it becomes imperative for the industry to thrive in the global energy mix and ensure profitable growth. By replacing standalone regional Power Lists with our comprehensive top 100, we aim to showcase individuals who have made a profound impact on the industry worldwide over the past 18 months. This refreshing approach eliminates repetitive company appearances and emphasises the need for change.
The Wind Power List is just the latest addition to our suite of power lists, which also includes the European Power List and the Women’s Power List from 2021 and 2022. These power lists are recognised as the leading rankings of the world's top players in the renewable energy sector, and they are relied upon by industry insiders and investors alike.
The Wind Power List is now available to view here. The list is accompanied by detailed analysis and insights from Tamarindo's expert panel, providing a valuable resource for anyone looking to understand the dynamics of the wind power industry and identify the individuals and organisations driving its growth and success.
We extend our congratulations to all those who have earned a place in the top 100 and express our gratitude to our headline sponsor, Green Giraffe, for their invaluable support.
Indian developer Torrent Power has ordered 100 Suzlon turbines for a 300MW wind project in the Karnataka region of India.
The project is due to be commissioned in 2025. This is the fourth order that Suzlon has won from Torrent.
Copenhagen Infrastructure Partners has formed a joint venture with Myrsky Energia to develop 1.8GW of onshore wind projects in Finland.
CIP is investing in the partnership via its Flagship Funds. This is CIP's first investment in onshore wind in the Nordics.
Bids are due next month in Japan's second utility-scale offshore wind tender, but the country must move faster to finally unlock its potential.
Next month, developers are due to finalise their bids in the Japanese government’s second tender for utility-scale offshore wind. This 1.8GW tender will give us a good indication of investor interest in the country after changes to bidding rules last year.
Japan launched this tender in December and is looking for developers in four areas: two sites off the coast of Akita Prefecture (356MW Happo-Noshiro and 336MW Oga-Katakgami); one in waters off Niigata Prefecture (700MW Murakami-Tainai); and one off Nagasaki Prefecture (424MW Saikai). It is due to reveal winners in March 2024.
We have seen strong interest in Japanese offshore wind, both from local companies such as Mitsubishi, Marubeni and Tepco, and overseas utilities including Ørsted and RWE. But analysts have warned Japan should do a lot more to stimulate investment because its clean energy plans are slipping behind other developed nations.
Japan’s latest offshore wind tender faced a one-year delay because the government changed the tender rules following the first utility-scale offshore wind tender, for three sites totalling 1.7GW, where the results were announced in December 2021.
The government faced criticism after that tender because all three sites were won by groups led by Mitsubishi: the 819MW Yurijono and 479MW Noshiro Mitane Oga sites off Akita Prefecture; and the 391MW Choshi off Chiba Prefecture. Rival bidders were unhappy that Mitsubishi was able to dominate a tender focused on price alone.
In response, the government delayed the second utility-scale tender so that it could change the rules – but bidders don’t seem to be much happier with the new system.
The revised tender rules include the ability for companies to secure higher scores if they can commit to earlier start-up dates for their project; and there is a limit of 1GW that any single bidder or consortium could win across the four bidding zones. This is a sensible move that addresses the concern about a single company dominating, but bidders are now complaining that the new rules would stop them taking advantage of large economies of scale in their bids. The rule-makers are damned either way.
Our view is that the revised rules should enable more utilities, including international companies, to gain a foothold in Japan’s offshore wind market. This should be good for long-term competition. But we will only know that when the winners are revealed.
The delays to the second utility-scale auction round also hint at a broader malaise in the renewable energy sector in Japan. Momentum for offshore wind may be building now, but investment in the sector has also been held back by unambitious targets.
Japan is aiming for 5.7GW installed offshore wind in its waters by 2030, according to a target in its 6th Strategic Energy Plan, but this is a reduction from the previous goal of 10GW installed by 2030. Japan’s target now is for 10GW of offshore wind projects approved in its waters by 2030, rather than built. This is a big change and does little to help improve the share of renewables in the Japanese electricity mix, which is the lowest in the G7 according to research by think tank Ember published last week.
In addition, the target of between 30GW and 45GW installed offshore wind by 2040 does not give a clear message to investors. It is so broad that companies across the offshore wind value chain will not know how much to prioritise Japan in their plans. It is not easy for the Japanese government to make such a commitment, as unlocking offshore wind in Japan’s waters relies on floating wind reaching commercial maturity, but the government should show its ambition and trust the technology will catch up.
Even so, the momentum for offshore wind in Japan has built in the last six months.
In December, Japanese conglomerate Marubeni commissioned the country’s first large offshore wind complex: a 140MW pair of projects off the coast of Noshiro in Akita Prefecture. This has taken the amount of operational offshore wind in Japan’s waters to 190MW, with 344MW under construction and due to be commissioned by the end of 2025; and a further 1.9GW of projects with off-take agreements in place.
In addition, Hibiki Wind Energy last month ordered Vestas turbines for the 238MW Kitakyushu-Hibikinada wind farm off the coast of Fukuoka Prefecture, which is set to be commissioned in 2025. Hibiki is a joint venture of five firms: Hokutaku, Kyuden Mirai Energy, Kyudenko Corporation, J-Power, and Saibu Gas.
These deals show that the Japanese offshore wind sector is moving. After a decade of delay, that is no small feat. But now the country must do what it can to unleash its full potential. Failing to do so would be a huge missed opportunity.