US startup raises $120 million to expand deployment of VPPs

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From pv magazine USA

Swell Energy has revealed that it has raised $120 million to further expand its VPP programs. The round was led by SoftBank Vision Fund 2 and Greenbacker Development Opportunities Fund I, LP, with participation from the Ares Management Infrastructure Opportunities Fund.

California-based Swell Energy is developing 350 MWh of VPPs that leverage 16,000 battery storage systems in homes and businesses.  The company provide a range of grid service capabilities in territories such as Hawaii, California, and New York.

The company said that venture capital funding will support existing VPP development and the deployment of an additional 200 MWh of contracted capacity through approximately 10,000 energy storage systems that will integrate into new VPPs across the United States.

Swell Energy creates VPPs by linking utilities, customers, and third-party service providers together and aggregating distributed energy resources. In particular, working with utilities to compensate customers for operating their batteries for savings and security helps to create a cohesive network of solar-powered batteries that supports overall grid reliability, stability and sustainability.

As explained in a recent article by Jigar Shah, the director of the US Department of Energy Loan Programs Office, a VPP is a virtual aggregation of distributed energy resources (DERs) like solar, energy storage, electric vehicles chargers and demand-responsive devices (such as water heaters, thermostats, and appliances). VPPs offer grid operators a large-scale, utility-grade alternative to new generation and system buildout through automated efficiency, capacity support, and non-wire alternatives. Shah said that by deploying grid assets more efficiently, an aggregation of DERs lowers the cost of power for everybody – especially VPP participants.

VPPs are relatively new in the United States, having been established in 2020 under FERC Order 2222, which opened the door for VPPs in the United States. Shah said widespread deployment is needed at the national scale to unlock the true potential of VPPs.

“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, the 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.”

Swell Energy is working with multiple California utilities to help expand residential participation in capacity bidding programs. Through a VPP, 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.

Formed in 2014, Swell Energy has raised $582 million in funding to date and counts CIT Group, For Good Ventures, Aligned Climate Capital and Third Sphere as investors in its VPP business.

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