22 Nov 2022
As homeowners and businesses embrace more renewable energy and battery storage to manage costs and increasingly frequent power outages, and as utilities seek to provide cleaner and more reliable energy to customers, Swell Energy announced that it has raised $120 million to further its popular virtual power plant (VPP) programs. The round was led by SoftBank Vision Fund 2 and Greenbacker Development Opportunities Fund I, LP, with participation from an Ares Infrastructure Opportunities fund and Ontario Power Generation Pension Fund.
The funding announced today will support Swell’s development of 600 MWh of VPPs through the deployment and aggregation of 26,000 energy storage systems located at homes and businesses across the United States. Swell VPPs provide a variety of grid service capabilities through projects in utility territories across Hawaii, California, and New York, aiding utilities in their mandate to deliver cleaner energy to customers and reduce the grid’s dependence on fossil fuel peaker plants.
Swell creates VPPs by linking utilities, customers, and third-party service providers together, and by aggregating and co-optimizing distributed energy resources through Swell’s GridAmp™ software platform. In particular, working with utilities, Swell delivers value to its network of customers through bill savings, GridRevenue™ and energy security, creating a cohesive network of solar-powered batteries that supports overall grid reliability and stability, while potentially reducing grid operating costs.
“By coordinating distributed energy resources across the grid to intelligently meet fluctuating demand, Swell’s AI- and machine learning-driven platform helps address a major challenge of the energy transition, while also lowering customers’ bills,” said Ben Parton, Director at SoftBank Group. “We are excited to support Swell’s team as they accelerate clean energy adoption.”
“Swell’s business model is an innovative application of existing technology directly solving two large issues plaguing the grid and renewable energy adoption: transmission and load shifting,” said Ben Baker, Managing Director and Principal of Greenbacker Development Opportunities Fund. “We couldn’t be more pleased to partner with Swell, its impressive management team, and the existing investor base. The company’s three business verticals—Grid Services, Finance, Development—are mutually beneficial, and together will swiftly expand the proliferation of renewable resiliency, providing value to both customers and utilities.”
In addition to the project finance opportunities with current utility partnerships, Swell is also pursuing development in otherwise underserved markets where critical grid services are necessary to strengthen and modernize infrastructure. In regions where local grids must evolve to accommodate more renewable energy and electric vehicle adoption, Swell’s VPP programs can provide increased grid flexibility while precluding significant investment in new fossil fuel generation.
For these utilities, Swell increases the stock of dispatchable behind-the-meter assets, aggregates these assets for grid services participation, and dispatches distributed energy resources to create ongoing value for the grid, all while creating an improved experience for the customer. Swell analyzes and identifies each region's distinct utility needs and grid stresses, then delivers the appropriate grid services through flexible energy storage solutions, helping with load management, renewable energy balancing, and ancillary grid services.
“Swell is at the forefront of executing on the promise of virtual power plants, which we believe can be one of the most important and necessary advancements in smart grid service technologies available,” said Keith Derman, Partner and Co-Head of the Ares Infrastructure Opportunities strategy. “Ares has been working with Swell since its Series A raise in 2019, and we are excited to continue building upon that relationship with this follow-on investment.”
Businesses and homeowners participating in these programs benefit from Swell’s VPPs by paying less for their solar energy generation and storage systems, potentially reducing the risk of a local power outage, and keeping their homes and businesses securely powered through any outages. For example, Swell works with multiple California utilities to help expand residential participation in capacity bidding programs. Homeowners with solar and energy storage systems support the reliability of their local grids while reserving battery power for personal emergency use. The efforts are part of the California Public Utility Commission's goals to reduce the state's load during California Independent System Operator emergency power events.
“Utilities and investors have understood the importance of virtual power plants for some time now; this funding further signals that the capital markets see tremendous value in this new asset class,” said Suleman Khan, CEO of Swell Energy. “Virtual power plants are the key to a cleaner energy future at scale. Through the use of our GridAmp software, we are dedicated to enabling an accelerated transition to a carbon-neutral future compatible with the needs of both utilities and the communities they serve.”
This latest financing round brings Swell’s total equity capitalization to date to $152 million, including prior investments made by an Ares Infrastructure Opportunities fund, Aligned Climate Capital, Third Sphere, and others. Citi acted as sole placement agent on this transaction.
Swell Energy | www.swellenergy.com