French utility Engie has strengthened its position in battery storage in the U.S., saying Aug. 24 it has acquired Houston-based, private equity-backed Broad Reach Power in a deal valued at more than $1 billion.
The deal with private equity EnCap Investments’ Energy Transition Fund I and its partners Yorktown Energy Partners, Mercuria Energy and Apollo Infrastructure Funds comes as Engie aims to increase its battery capacity in the group to 10 gigawatts (GW) by 2030 to support its growing renewable energy business.
With the acquisition of Broad Reach Power, one of the top battery storage players in the U.S. and a utility-scale independent power producer, Engie will add 350 megawatts (MW) of grid-scale assets in operation with 880 MW more under construction that is set for commissioning before year-end 2024, the company said in a news release. Most of the projects under construction are located in the area served by the Electric Reliability Council of Texas.
The deal also includes 1.7 GW of advanced-stage projects plus a pipeline of early-stage projects.
Assets are located in Texas, California and the central U.S.
“This acquisition is fully in line with Engie’s strategy: it will contribute to the development of a low-carbon, affordable and resilient energy system where flexible assets will play a critical role alongside renewables,” Engie CEO Catherine MacGregor said.
In a separate release, EnCap noted the sale does not include Broad Reach Power’s portfolio of 1.8 GW of solar and wind power projects or the 4 gigawatt-hours of battery storage in the U.S. Mountain West region.
“Our firm’s success is a direct result of the tireless dedication of our team, who go above and beyond every day,” said Broad Reach Power CEO Stacey Peterson. “I want to thank the BRP team for their amazing work, and also thank EnCap, Apollo Funds, Yorktown and Mercuria for their unwavering support of our business over the past four years. This a great transaction and we are excited for its continued growth.”
The deal emerged after investment bankers from Credit Suisse brought their client Engie to EnCap with an offer to buy Broad Reach Power, EnCap Energy Transition Managing Partner Shawn Cumberland told Hart Energy. Broad Reach Power will become part of Engie’s Flexible Generation business.
The company is one of several clean energy-related businesses backed by the firm amid the global transition to a lower carbon economy to reduce emissions.
In late 2022, EnCap Investments sold energy storage company Jupiter Power to BlackRock Alternatives, marking the $1.2 billion fund’s second exit. Jupiter Power operated at the time the largest battery storage fleet in Texas with proprietary dispatch optimization.
“ETF committed $600 million of equity to BRP and Jupiter plus additional equity in some of our other renewable portfolio companies that are not exclusively storage companies,” Cumberland said. “Battery storage is attractive for the simple reason that there is a strong need for the services they provide with intermittent renewable resource percentages increasing on the nation’s electric power grids.”
More than 2,145 megawatt-hours (MWh) were added by the U.S. energy storage market in first-quarter 2023, according to data from the American Clean Power Association. Developers connected 5,098 MWh of battery storage in the second quarter.
“There will continue to be a growing need for more storage as renewables market share continue to grow,” Cumberland said, adding BRP and Jupiter are leaders in energy storage and have early mover advantage. “Both renewables and batteries would continue to grow even without the IRA [Inflation Reduction Act]; we don’t see it as the major driver of the market.”
The transaction is expected to be completed in fourth-quarter 2023 if required approvals from regulators are received.
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