Acquisitions by PE firms and PE-backed entities surged by 150% y/y, while IPPs/utilities also increased activity by 90%. The activity is driven by the strong economics of storage systems, which allow for revenue stacking by participation in ancillary services such as frequency and voltage regulation, in addition to serving as backup for intermittent generation sources. Additionally, the tax credits for standalone battery systems offered under the IRA have improved their investability. Texas experienced a 3X y/y rise in transactions for storage systems in 2022 and accounted for 60% of all storage deals YTD 2023. This is mainly due to the 25.8 GW of solar and wind capacity expected to come online in the state by 2025. The planned capacity addition has increased the need for storage systems to meet the rising demand for ancillary services against the intermittencies in the generation stack, and investors are capitalizing on this need.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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