Swell’s largest contract yet comes after lining up $450 million to aggregate residential solar-battery systems to help the grid.
Hawaii’s largest utility enlisted a new tool in its quest for a carbon-free electricity system: thousands of batteries installed in people’s homes.
Hawaiian Electric won regulator approval for a $25 million plan to harness solar and batteries at 6,000 homes across the islands of Hawaii, Maui and Oahu. Venice Beach, Calif.-based startup Swell Energy will oversee customer outreach, installation and operation of the network, which will serve as a virtual power plant.
Once complete, the portfolio will supply 25 megawatts of solar power and 80 megawatts of battery capacity, which Hawaiian Electric can use as electricity during hours when grid demand surges, as well as delivering rapid-fire fast frequency grid response.
The project tackles several challenges simultaneously. Hawaii passed a law requiring 100 percent renewable electricity by 2045; that requires shutting down fossil-fueled plants and replacing them with suitable alternatives. But the island grids quickly became saturated with solar production at midday, prompting the adoption of batteries to store the surplus and make it available after the sun goes down.
The virtual power plant model offers homeowners backup power and power bill savings from self-supplying electricity for more hours of the day. The battery capacity is also available to the utility to deal with the systemwide challenges associated with the transition to cleaner energy. This requires balancing grid needs with ensuring that customers are backed up and fairly compensated.
“What do homeowners think about this? Folks dig it,” CEO Suleman Khan told Greentech Media in a December interview. “The dual use case is quite efficacious for both parties.”
This is still an emerging asset class, but last month Swell revealed it had raised a $450 million project finance fund from Ares Management Corp. and Aligned Climate Capital. The fund provides the venture-backed startup with low-cost capital to build out battery networks, in anticipation of the long-term contracted revenue Swell will earn from utilities once the fleets are operational.
The startup previously closed deals with utility Southern California Edison, both to keep up with demand in rapidly growing parts of Orange County and to supply capacity to the Oxnard and Ventura region in place of a scuttled gas plant. It was not immediately clear when the new Hawaii project will commence full-scale operations.
2020 saw a flurry of new virtual power plant contracts, but the Hawaii deal appears to be the largest in the U.S. thus far.
Sunrun, the nation’s largest solar installer, has delivered more than 13,000 home battery systems nationally. It first won a capacity contract in the New England capacity market, for delivery in 2022. Last year, it finalized a 10-year, 5-megawatt contract with SCE and a 20-megawatt deal with Bay Area community choice aggregators, which purchase clean power for the populations they serve. Utilities like Portland General Electric and Vermont’s Green Mountain Power also expanded their own virtual power plant investments.
“2020 has been a period of great enlightenment among utilities with respect to behind-the-meter energy storage,” Khan said, referring to batteries located on customer property. “The race for the virtual grid is on.”
Swell’s effort joins a growing roster of projects large and small that Hawaii is building to wean its grid off fossil fuels.
Hawaiian Electric contracted with developer Plus Power for a massive standalone battery. The 185-megawatt/565-megawatt-hour Kapolei Energy Storage project will take over duties currently served by the AES coal plant on Oahu. The list of major solar-plus-battery plants under construction in Hawaii has grown sufficiently lengthy as to be hard to keep up with. On Kauai, the local electricity cooperative opted this month to build solar-charged pumped hydro storage, which will use elevated reservoirs to deliver clean power through the night.