Private equity firm Energy Capital Partners has bought its way into the energy storage development business with Convergent Energy + Power, the companies announced Wednesday.
New York-based Convergent develops, owns and operates large-scale storage for industrial customers and utilities. It distinguished itself as a rare startup that chose to self-fund its projects, raising $70 million to do so. Convergent also took the title for largest commercial and industrial storage project, with a 10 megawatt/ 20 megawatt-hour system in Ontario, Canada.
Energy Capital Partners owns and invests in a wide portfolio of energy companies, including gas generator Calpine and residential solar company Sunnova, but this marks its first storage acquisition. The firm acquired Convergent as part of its multi-billion dollar Fund IV.
The companies declined to name the sale price, but noted that upfront acquisition payments and ongoing funding for projects will amount to several hundred million dollars of investment. Convergent will put that capital to work in what CEO Johannes Rittershausen calls a “storage IPP,” self-financing projects for customers and owning them for the long haul.
“The model we have now, moving forward with ECP, is much more efficient, and we can offer better value propositions,” Rittershausen said. “Funding is of no issue to us.”
From the buyer’s perspective, Convergent stood out for its track record of operating projects and customer relationships, said ECP principal Andrew Gilbert.
“We’ve been pitched on pipelines, but Johannes and team have actually executed,” Gilbert said. “Convergent delivers real savings to customers almost immediately, in material ways. The returns are quite attractive compared to other things we see in renewables or storage.”
Notably, both parties expressed wariness about competing in the major utility-scale procurements, where big players like NextEra and First Solar compete on tight margins for massive projects. They described that market as more commoditized than the middle ground where Convergent operates, which is bigger than the typical commercial project, but still driven by private customer needs.
That’s not a particularly crowded field right now, and Convergent’s self-funded model differentiates it from the competition. Venture-backed developers typically hand off their projects to project financing funds to own.
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